Slow economy: Not a recession yet

by Mark Silva

The "economic slowdown,'' as President Bush calls it, has not turned negative yet. The nation's Gross Domestic Product grew by a meager 0.6 percent during the first quarter of the year, the Commerce Department reports this morning.

That equaled the sluggish growth of the final quarter of 2007, which means that, rather than two consecutive quarters of retraction in the economy - spelled "recession'' - the nation has racked up two quarters of lackluster growth.

Economists still are predicting an actual slowdown during the second quarter, April through June. Signs of that can be seen within the last quarter's measure of the value of all goods and services produced within the United States: Builders cut spending on housing projects during the first quarter by 26.7 percent.

American consumers, whose spending drives the economy, also grew more cautious during the first quarter, with spending up 2 percent - the slowest rate since the second quarter of 2001, during the last official recession. Nearly one-quarter million jobs were lost during the first quarter, with the unemployment rate rising to 5.1 percent.

"The average person doesn't really care what we call it,'' the president said yesterday in the Rose Garden, asked why he is reluctant to mouth the word, recession. "The average person wants to know (why) they are paying higher gas prices and paying more to stay in their homes.... These are tough times... The economists can argue over the terminology... The American people know it.''

The Bush administration is counting on its $168 billion economic-stimulus package -- with tax rebates that started depositing into bank accounts on Monday -- to help spur spending during the second quarter. And the Federal Reserve today is expected to cut another key interest rate to 2 percent.