Spurt in growth boosts Bush

Click to follow
THE United States government announced yesterday that the national economy grew by an annual rate of 2.7 per cent in the third quarter of 1992, almost double the 1.5 per cent of the previous quarter, and far higher than analysts had expected.

The GDP figures from the Commerce Department were the last important economic data before polling day, and could not have been a more welcome surprise to President George Bush, whose re-election campaign problems have all along stemmed from his perceived failure to put the country squarely on the road to recovery.

July-September was the sixth straight quarterly advance, and the fourth-best single quarter of the entire Bush presidency. It means that the economy has recouped the losses of the recession, and now stands above the previous high point of October 1990, when the downturn began.

Despite the more encouraging third-quarter performance, the recovery is still much weaker than in previous business cycles, as a breakdown of the GDP data underlines.

Inventory build-up was one factor, as was an unusual upturn in military expenditure, while the 3.4 per cent boost in consumer spending over the period looks precarious.

The closely watched Conference Board monthly index of consumer confidence, also released yesterday, dropped 4 points in October for its fourth consecutive decline, bringing the index to its lowest level since February.

Separately, the Labor Department reported that average gross industrial wages rose by only 3.5 per cent in the year to 30 September, the smallest growth in five years.

Unemployment, at 7.5 per cent, is nearly 2 points higher than when Mr Bush took office, but well below the 10 per cent at the end of the 1980-82 Reagan recession. Inflation, as measured by the GDP deflator published yesterday, is running at an annual rate of only 2.1 per cent.

A survey of European business leaders shows 40 per cent in favour of Mr Bush returning to the White House compared with 35 per cent for Bill Clinton. In the UK 70 per cent supported Mr Bush and 14 per cent Mr Clinton, according to the Harris Research poll.

(Graph omitted)