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Economic Growth Slows; Clinton Says Stimulus Needed

By John M. Berry
The Washington Post

WASHINGTON

Hit by everything from a big winter storm to an enormous drop in defense spending, U.S. economic growth declined sharply to a 1.8 percent annual rate in the first three months of the year, the Commerce Department reported Thursday.

President Clinton used the slowdown from the 4.7 percent rate in the closing three months of last year to defend his efforts to boost the economy.

The report "plainly proves, I think, that the administration was right in trying to hedge against this economic slow growth by passing the jobs bill that the House of Representatives passed and that the Senate wanted to pass," Clinton told reporters. "It proves that we were right in both reducing the deficit and in trying to create some jobs right now in this economy."

But Senate Minority Leader Robert Dole, R-Kan., who led the Republican filibuster that blocked passage of most of Clinton's $16.3 billion economic stimulus spending bill, saw a different lesson in the numbers.

Calling the growth rate a "disappointing statistic," Dole said it is an indication that Clinton's "economic plan is scaring a lot of Americans: businessmen and women, consumers and investors. After 100 days of "tax and spend, it looks like the American people are grading the president with their pocketbooks. ... And they are not buying."

Whatever the message in the numbers, administration officials said Thursday that they have not decided how to try to salvage portions spending bill.

Economic analysts attributed the economy's weak performance in the first three months of the year to a range of factors, some of them interrelated.

After rising at a 3.7 percent rate in the third quarter of last year and a 5.1 percent rate in the fourth, spending for personal consumption went up only 1.2 percent in the first quarter. Spending for nondurable goods such as gasoline, clothing and food declined slightly while that for durable goods, relatively expensive items such as automobiles and home appliances, rose at a 0.7 percent rate. Some of that may have been due to last month's severe weather, which kept many consumers out of stores for several days, analysts said. Analysts estimated the storm and earlier heavy rains and flooding in the West may have clipped one-half to three-quarters of a percentage point off the growth rate. Consumer purchases account for two-thirds of gross domestic product, which measures total production of goods and services in the United States.

After a post-election bounce, consumer confidence declined in the first three months of the year before rebounding slightly in April. Laura D'Andrea Tyson, head of the president's Council of Economic Advisers, said she does not believe the drop in confidence was a result of Clinton's proposed tax increases because polls show that the public supports the president's goal of deficit reduction.