Modest Growth Is Worrisome: Economy Lags Behind Analysts' Predictions ...
Two weeks ago, the White House noted that June was the 43rd month of the current economic expansion, that the unemployment rate fell from 7.3 percent in May to 7.1 percent, and that consumer prices actually declined, on average, in the first five months of this year.</br></br>But last week, chief of staff Donald T. Regan indicated the Reagan administration's actual growing worry over the state of the economy, with congressional and state elections only four months away, by publicly pressing the Federal Reserve to cut interest rates.</br></br>The central bank, concerned that the economy has shown no sign of a long-predicted second-half pickup, reduced a key lending rate from 6.5 percent to 6 percent, its lowest level since January 1978.</br></br>Forecasters in the administration, at the Fed and throughout the private economy have been expecting that the nationÛªs output of goods and services would be increasing by now at an annual rate of 4 percent, at least. Instead, many of them think growth in the second quarter was at about a 2 percent rate, and the private economists making public predictions are increasingly saying the remainder of the year may not be much better.</br></br>During the last two years, the economy has had exactly the same problem: growth has been only half as fast as predicted, 2 percent instead of 4 percent.