IF President Bush's reelection prospects hinge on how
successfully the nation's economy emerges from recession, the next
nine months will put his stewardship to the test.
Talking to reporters at a recent Monitor breakfast, the
president's chief economic adviser gave a sober forecast of United
States economic growth for 1992. Michael Boskin, chairman of the
White House Council of Economic Advisers, asserts that the 2.2
percent growth rate he projects will register just enough economic
activity to prevent the unemployment rate from rising.
American voters "tend to look at who's on watch. It's clear that
the state of the economy is hurting the president in his popularity
and his approval rating, and there's no doubt about that," Mr.
The University of Michigan Survey Research Center's recent poll
of American consumers across the country shows that 50 percent of
the respondents rate government economic policy as "poor."
In a damaging cycle, the ailing US economy has reflected
plummeting consumer confidence over the past year and a half. A
sharp reduction in consumer spending - which makes up a crucial
two-thirds of economic activity - has hit the country hard.
Gail Fosler, chief economist of the New York-based Conference
Board, draws a direct correlation between the president's low
approval rating in polls and the Conference Board's abysmal
consumer confidence index. "The message is the fundamental
insecurity about the long-run job outlook. It won't improve soon,"
A reading of recent statistics would have some observers believe
otherwise. Following a 2.1 percent increase in January, retail
sales rose by 1.3 percent last month. The sagging real estate
sector was propped up in February by a surprising 9.6 percent
increase in the construction of new homes across the country. And,
after three months of decline, the nation's factories, mines, and
utilities posted a slight gain in February. Even Boskin is cautious
about defining these gains as momentum; he wants to watch the next
"All these numbers come spewing out, and people get all excited
with the news, whether it's good or bad," Ms. Fosler says. "But we
keep getting mediocre growth rates, and that's because the majority
of the economy is in the service sector, which is a real drag on
growth." Services account for 70 percent of the nation's employment
and 50 percent of its output. Cutbacks will continue to affect
retailers, restaurants, banks, and insurers, to name several
employers in the service category. …