NEW YORK, FEB. 6 -- President Bush offered the country an economic pep talk here tonight, predicting that the current recession would be "mild and brief" and adding that what is needed most now is "a boost in confidence."
The president also said the Persian Gulf War would not put too much additional burden on the economy and suggested that a successful end to the war would help assure long-term economic growth here and around the world.
"The road to real peace will be difficult -- long and tough," Bush said. But he argued that "by standing up to aggression in the gulf, we are guaranteeing the future security and stability of that area, that is so vital to global economic prosperity."
Bush repeated his belief that the allied campaign in the gulf is "on course and on schedule," adding that "hour by hour, Iraq's capacity to wage war is being systematically destroyed by American and coalition forces."
He pledged that while he could not predict when the war would end, it would not drag on indefinitely. "I've never been more certain of anything in my life," he said. "We're going to win it."
Speaking to the Economic Club of New York in one of the regions hardest hit by the current recession, the president skipped lightly over the rising unemployment rate and shocks to the banking and real estate sectors, suggesting they are only "temporary disturbances and short-term setbacks" to an economy that is fundamentally sound.
"We are in a recession, there's no question about that," Bush said. But he argued that the downturn "does not signal any decline in the fundamental, long-term health or basic vitality of our economy. America is a 'can do' nation."
He blamed the decline on a series of shocks generated by Iraq's invasion of Kuwait, which he said tipped an already weakened economy into a full-fledged recession. But as he did in his State of the Union address on Jan. 29, Bush sought to boost consumer confidence.
"While our economy may be beset by difficulties," he said, "it should not be beset by doubt." He asserted that his own confidence about the future "is backed by the facts." He pointed to declining interest rates, oil prices that have fallen since the outbreak of the gulf war three weeks ago and an inflation rate that has been "kept under control."
He predicted that the recession would end "in a couple of quarters" to be followed by "a robust economy."
As Bush spoke, anti-war demonstrators that police estimated at about 1,000 rallied outside chanting slogans. Three were arrested on charges of disorderly conduct.
Bush said his new budget would help assure long-term economic growth by maintaining a tight rein on government spending and pledged, as other presidents before him have done, that the federal deficit would be virtually eliminated in several years.
But he barely touched on the record federal deficit expected for the current fiscal year -- $318 billion -- or on the fact his new budget projects a $281 billion deficit for fiscal 1992. "True," he said, "the deficit is high -- unacceptably high. The S&L costs, the war and the economic decline haven't helped a bit." He said last year's budget agreement, which includes caps on spending and pay-as-you-go provisions, will shrink the deficit in future years.
Bush offered a preview of the national energy strategy that Energy Secretary James D. Watkins is expected to unveil soon, saying it would reduce the vulnerability of the American economy to disruptions in world oil supplies.
But he sounded a defensive tone as he tried to counter critics who are predicting already that the administration's plan will not go far enough to assure conservation.
"Some will argue that reducing our energy vulnerability is not enough and that we should embark upon more drastic measures designed to achieve total energy independence," he said. "The reality is that we are a long way from total energy independence. We must avoid unwise and extreme measures that would seriously hurt American consumers, American jobs and American industries."
The president also urged Congress to take quick action on the banking reforms outlined Tuesday by Treasury Secretary Nicholas F. Brady. He said the proposal would continue to protect depositors while assuring that U.S. banks can compete in today's global financial markets.
The president talked briefly about the shape of the world in the aftermath of the gulf war. Asked to define what he means when he describes the prospect of a "new world order" coming out of the gulf war, he said he could foresee a world in which the United Nations has "a revitalized peacekeeping function" and in which closer bilateral cooperation between the United States and the Soviet Union assures similar cooperation between the superpowers at the United Nations.
Bush also said he believed U.S. leadership in the gulf war would pay dividends in future economic relations with Germany and Japan. He said he was grateful for the financial support pledged by the two nations to Operation Desert Storm and to frontline nations suffering economically.
But he said U.S. actions in the gulf were also helping the German and Japanese people, and said he hoped those people would see "a United States that has a vastly restored credibility" that would make trade and other economic relations more fruitful once the war ends.
"Because we've decided to bite off this tough assignment. . . we will have some. . . persuasiveness that will lead to more harmonious trading relationships," he said.
On military spending, Bush said he was prepared to shrink the defense budget but not as much as some members of Congress are advocating. He said the performance of high-technology weapons in the gulf war assures increased reliance on such weapons in the future. "We are going to have a high-tech, a highly mobile force," he said. "And it ain't going to come cheap."
Bad weather forced the president to travel by motorcade from the airport to the speech site in midtown Manhattan, tying up rush-hour traffic for more than an hour. Police cars blocked not only side streets but every garage and parking lot exit on the route, the Associated Press reported.