WASHINGTON -- What you see is what you get.
Increasingly, the economy under President 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."
The theme of slow growth is likely to be reinforced by two events this week. On Tuesday, the Commerce Department is slated to release a r 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 jumping to $12.1 billion in June. The 44% increase from $8.4 billion in May means the trade sector was weaker than expected.
Manufacturing Weak
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 midyear budget review, now late, that is due to be issued by the administration.
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.
High Hopes
It is becoming increasingly apparent that Mr. Clinton's hopes for a reviving economy, while not being thwarted, are taking longer to achieve than the administration expected 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 with a year ago.
Modest Growth at Best
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 Corp., analysts figure that job growth will pick up slightly to about 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 another notch to 6%.
Inflation in Check
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 and 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.
