WASHINGTON -- What you see is what you get.
Increasingly, the economy under President Bill Clinton is looking very much like the one inherited from President Bush. Economists say things are gradually getting better, but not quickly, and many are comfortable with forecasts of mild growth that continue through this year and 1994.
"There's very little sense of momentum building in most sectors right now." says Laurence H. Meyer, president of a forecasting firm in St. Louis. "This is still a very struggling economy."
Two events this week are likely to reinforce the theme of slow growth. On Tuesday, the Commerce Department is slated to release a revised estimate for gross domestic product in the second quarter that some analysts expect could show growth as low as 1%, down from the uninspiring 1.6% reported last month.
The main reason for the revision is the merchandise trade deficit, which stunned financial markets and the Clinton administration by jumping to $12.1 billion in June. The 44% increase, from $8.4 billion in May, means the trade sector was weaker than expected.
The trade figures highlighted the ongoing weakness in manufacturing as exporters find that business is drying up in Europe, which is in recession, and in Japan, which is scraping bottom.
The second event that will underscore the sluggish nature of the recovery is the mid-year budget review, now late, that is due to be issued-by the administration this week.
While the report is expected to produce a smaller deficit estimate for this year than the forecast issued in February, the word is already out that the administration is now expecting growth of only 2.1% in 1993. That would be down a full percentage point from the 3.1% estimate released earlier.
It is becoming increasingly apparent that Clinton's hopes for a reviving economy, while not thwarted, are taking longer to achieve than the administration was hoping when it took office in January.
The powerful forces retarding growth are the same ones that dogged the Bush administration. They include slow growth abroad that depresses demand for U.S.-made goods and services, defense cutbacks, overbuilt commercial real estate markets, low consumer confidence, and corporate restructurings that continue to put people out of work.
On top of that, businesses in general are fighting fierce global competition and using advances in, computers and communications to become more efficient.
One bright spot is that consumer spending has held up as well as it has. John Silvia, chief economist for Kemper Financial Services, Inc., in Chicago, notes that retail sales are up a respectable 6.1% compared to a year ago. The flood of mortgage refinancings is helping to put cash in people's pockets even though personal income has not been going up much, he says.
Still, prospects for growth through the end of 1994 are not very impressive. Economists belonging to the Public Securities Association recently estimated that GDP will rise 2.6% this year and 2.9% next year.
At NationsBank, analysts figure that job growth will pick up slightly to around 200,000 a month and bring down the jobless rate from the current 6.8% to 6.5% by the end of the year. Next year, they calculate slightly slower job creation of 150,000 per month, enough to bring the jobless rate down to 6%.
This is not an inspiring outlook, but it has its good side. The prospect of slow but steady growth should keep inflation low, which in turn should keep interest rates low. Low rates in turn have been a powerful tonic for the booming stock market. They also help to support long-term growth by keeping down costs for businesses and households.
It may not be the best of all worlds, but it seems to be the best we can get. And it may not be a bad world to live in.
