Recovery's here, but it's not clear how strong it is
The United States economy is rebounding from the recession, a variety of recent economic signposts indicate. But the recovery that's under way is less robust than its predecessors and threatens to bypass several key sectors of the economy, including production machinery and exports.
Figures released Wednesday on the gross national product show that during the first three months of 1983, the nation's output of goods and services grew 3.1 percent after adjustment for inflation. That was the strongest gain since the start of 1981, when the economy grew at a 7.9 percent annual rate.
But economists had been expecting an even better showing. ''We had expected GNP to be a little stronger'' than the Commerce Department's preliminary forecast of a 4 percent gain, says Alan Murray, vice president of New York's Citibank.
''The recovery's pace will almost surely be less than the 6 to 7 percent average GNP growth'' typical in the early stages of previous recoveries, says Ben E. Laden, vice-president and chief economist of T. Rowe Price Associates Inc., an investment research firm. ''It will be less balanced and more heavily concentrated in consumer spending.''
The 46 economists surveyed this month by the newsletter Blue Chip Economic Indicators have lifted their projection for inflation-adjusted growth. They now see GNP growing 2.9 percent in 1983, vs. a 2.7 percent climb that was forecast in March.
The consumers who are expected to propel the recovery have some sobering news for President Reagan and for the US auto industry. Their views were reported in a newly released survey of public attitudes toward the economy commissioned by the New York Stock Exchange.
Only 37 percent of the people surveyed said they were better off than before Mr. Reagan became President. And a majority of them plan to keep their current cars for 10.5 years, nearly double the typical 5.4-year ownership period for their previous cars.
By contrast, the survey found signs that the surge in housing sales may continue. Among the survey respondents who rent, some 62 percent hope to buy a house soon and believe they will be able to afford one. And among those who own, one-third say they want to buy a bigger or nicer house soon.
Consumer spending for housing played a role in pushing up GNP during the first three months of the year. Residential fixed investment, or home purchases, jumped 83.1 percent in the first quarter, compared with the last quarter of 1982 , increasing $7 billion after adjustment for inflation.
The housing sector has appeared strong lately even though housing starts declined 9.2 percent in March, to a 1.7 million annual pace.
Personal spending also increased during the first quarter, climbing at a 2.3 percent rate, slower than in the last quarter of '82. The fastest percentage growth among consumer purchases was among durable-goods items like appliances. But car purchases, which increased substantially in the fourth quarter of last year, dropped slightly in the first three months of this one.
Still, ''personal consumption should pick up'' in coming months, says Robert Gough, senior vice-president at Data Resources Inc., an economic forecasting firm. One reason for the expected increase is that consumers have more to spend, since personal income in March grew at 0.6 percent, the largest gain in that measure since November.
Meanwhile, the economy also got a push as companies decided to slow the rate of inventory clearance, which occurs when they sell goods but don't replace the stock. The clearance process holds down new production and lowers GNP. The value of inventories, after adjustment for inflation, dropped $12.4 billion in the first quarter of the year, vs. a drop of $20.3 billion in the last three months of '82.
But inventory changes are not expected to continue to boost GNP statistics. ''Helpful as the inventory swing has been in getting the recovery started, however, it is a force that inevitably is quickly spent,'' the Morgan Guaranty Trust Company notes in its Morgan Guaranty Survey.
The major reasons this recovery will lag previous rebounds, forecasters say, is that both US exports and spending on capital goods will remain weak. Investment is being dampened by the large amounts of excess capacity companies still have available. But in March the nation posted its best figures on use of plant capacity since August. And inflation-adjusted nonresidential investment rose 2.7 percent in the first quarter, after four consecutive quarterly declines.
The forecasters say exports will remain weak because a strong dollar is making US goods difficult to sell abroad. In the first quarter, exports, offset by imports, dropped $3.2 billion. And economists say the first quarter's 5.8 percent increase in the implicit price deflator, a GNP-related inflation measure , overstates - for complex technical reasons - the rate at which prices are climbing. Inflation will likely be in the range of 4 to 5 percent this year, Mr. Gough says.