It's Time for the Fed To Come to the Rescue
The skeptics about the economy were right, and the optimists - including high Bush administration and some Federal Reserve Board officials - were wrong. Revised gross national product data for the second quarter imply the economy is still in recession, not yet edging its way out of it.</br></br>This is a case where the nation's leading business organizations, including the U.S. Chamber of Commerce and the National Association of Manufacturers, called the shots almost precisely - but were hooted down as naysayers by many leading academics.</br></br>But whatever one wants to say about the chamber's and NAM's often conservative social policies, they base their forecasting not on tea leaves, but on the hard-nosed reports of business executives who must deal with the real world.</br></br>The ongoing debate on the precise timing of recession's end misses a more important point. As Larry Hunter, deputy chief economist for the chamber, said, "The bad news is that we are in a long-run economic decline. The economy is not growing fast enough to get us back to recent growth peaks. That means we have suffered a permanent reduction in our standard of living since 1988."</br></br>The revised second-quarter numbers show that the GNP shrank at an annual rate of 0.1 percent, the third quarterly decline in a row. Preliminary data, cheered by the administration only a month ago, showed an expansion of 0.4 percent.