An article yesterday said that the White House had no comment about the report released yesterday by the Commerce Department on the second-quarter gross national product. An aide in the White House press office, apparently unaware that a detailed statement was being prepared, said none was available. The detailed statement was issued later in the day, saying that growth was expected to accelerate in the second half of the year.
The sluggish U.S. economy, restrained by a rising trade deficit, grew at a weak 1.7 percent rate in the second quarter, the Commerce Department reported yesterday.
While most forecasters expect at least somewhat faster growth in the second half of the year, there is no sign of it yet, both private and Reagan administration economists said.
The gain shown in yesterday's preliminary estimate for the gross national product, after adjustment for inflation, was substantially lower than the 3.1 percent rate indicated several weeks ago in the department's preliminary "flash" figure.
The downward revision was primarily because of greater weakness in trade than first assumed and of businesses adding to their inventories more slowly than expected.
Real GNP rose at a 0.3 percent rate in the first quarter. Thus, in the last six months, the economy has been expanding at a 1 percent annual rate, far below the 4 percent rate predicted by the administration in its forecast last winter. Over the latest four quarters, growth has been only 1.9 percent.
In a separate report, the Federal Reserve Board said that industrial production rose 0.1 percent in June, the same amount as the month before. The small increase in output underscored again the difficulties the nation's goods-producing industries are facing as a result of the worsening trade deficit, analysts said.
The White House, which often issues a statement about changes in major economic indicators, had no comment on the GNP figures.
Commerce Secretary Malcolm Baldrige said that the latest estimates indicate "some pickup in production from a flat first quarter. The gain, however, was less than estimated one month ago, primarily reflecting downward revisions in inventory investment and net exports."
Baldrige said the estimated real volume of exports last quarter fell at an annual rate of 12.5 percent while imports rose at a 1.4 percent pace. "We continued to consume and invest more than we produced, with foreign suppliers making up the difference," he said.
Meanwhile, in another day of testimony before Congress, Federal Reserve Chairman Paul A. Volcker warned that the United States, "in a very real sense, almost can't afford" to try to reverse the growing trade deficit by means of a cheaper dollar without, at the same time, reducing the federal budget deficit.
He said that if the trade deficit falls, so will the inflow of foreign capital that has helped hold down U.S. interest rates in the last few years. If pressure on credit markets is not relieved by cutting the budget deficits when that foreign capital inflow slows, then interest rates could rise again.
The Fed chairman indicated that a sharp decline in the dollar could endanger the central bank's anti-inflationary policies. His remarks helped stabilize the dollar's value yesterday on foreign exchange markets. The dollar's value has dropped about 12 percent since February.
While Volcker was appearing before the Senate Banking Committee, a group of five prominent private economists told a House Banking subcommittee that they don't think the economy is going to drop into a recession but neither is growth going to rebound sharply. All five said that continued high budget deficits are responsible for many of problems now facing the economy.
"I do not see any significant improvement in the economy's performance during the balance of 1985 or 1986," declared Norman Robertson, chief economist of Mellon Bank in Pittsburgh. "The expansion is very lopsided, with the service and construction sectors generating most if not all of the growth in overall economic activity. But further strong gains in these two major sectors of the economy may be increasingly difficult to achieve. . . .
"In a word, I expect that the United States will experience a 'growth recession' through 1986," Robertson said.
In a growth recession, real output does not fall, but it grows so slowly that idle productive capacity and unemployment increase.
Lawrence Chimerine of Chase Econometrics said that he, too, believes the nation is in a growth recession. Ticking off a number of signs of continued economic weakness, Chimerine concluded, "The economy . . . appears to be in a holding pattern, with the same general trends that have been in place for nearly a year continuing essentially as is."
Michael Sumichrast, chief economist of the National Association of Home Builders, also said that the nation is in a growth recession, which he said will push up the civilian unemployment rate -- 7.3 percent in June -- by a full percentage point by the fourth quarter of next year.
Allen Sinai of Shearson Lehman Brothers and former Federal Reserve governor Nancy Teeters, who is now chief economist for IBM, were somewhat more optimistic, projecting real growth of about 3 percent later this year and in 1986.
However, Sinai said his forecast was made assuming that the Federal Reserve further eases its monetary policy and that the value of the dollar declines but does not collapse. "Both are in question now," he said.
One administration economist said the surge in money supply growth over the last nine months should get the economy moving again. "I look for it almost any day. . .. It's a question of time." The economist said that the pickup in growth could be "a lot stronger" than the 3 percent or so pace described by Sinai and Teeters.
However, the Reagan economist added, so far there is "not one sign" of such a rebound.
The Commerce Department report said that in the second quarter both residential and business investment rose strongly, going up 14.3 percent and 13.6 percent, respectively. Business investment fell slightly in the first quarter while residential investment rose 5.3 percent.
Spending by consumers rose 5.2 percent, the same as in the first quarter