NOT ONLY is the American economy now growing very slowly, but for several years it's been growing more slowly than the statisticsseemed to show. That cheerless message emerges from the Commerce Department's estimates for the spring quarter of this year and its revisions of its data back through 1987. The immediate question is whether the country is now sliding into a recession. The short answer is: not necessarily.
But the danger is obvious. By November it will have been eight years since the last recession ended -- by far the longest peacetime cycle of growth in the country's history. (The longest without the adjective, if you were wondering, was just short of nine years, from February 1961 to December 1969.) As the Bush administration repeatedly points out, there is no iron law of economics that requires a recession every so many years. But it's abundantly clear that the internal forces for growth in the country have weakened. Consumers' spending is slackening as people become more cautious. Business investment has been flat for a year, and housing investment has been falling. Federal spending is hardly likely to rise. While a recession is not inevitable, what will keep business growing?
The first requirement is a budget agreement -- substantial and solid -- between the administration and the congressional leadership. Cutting the deficit will allow interest rates to fall, encouraging more investment. That's really the only way that federal action can hope to have much effect on the growth rate in the short term.
Beyond that, Americans are going to have to look to exports to keep the engine from slowing down. Exports have been rising rapidly for some years, and it's now crucial to keep them rising. Americans' ability to sell to customers abroad is emerging as the chief determinant of growth here -- or the lack of it. If exports don't rise, neither will employment or incomes.
President Bush has said that his leading priority in foreign economic policy this year is the round of world trade negotiations now moving toward completion. Their purpose is to open markets wider to everybody's exports. But he's running into a lot of resistance both from governments abroad and from protectionist congressmen here in Washington.
Above all else, American success in exporting during the next couple of years will depend on the performance of the big economies abroad. Japan and West Germany have both swung into phases of very rapid growth that can lift demand worldwide. If the United States is now to prosper, it is going to have to make itself -- like them -- an export-led economy.