Is a Recession Looming?

— -- The Bush camp is uttering the “R” word, suggesting that if the Texas governor takes the White House any blame for a recession would belong firmly with his predecessor.

ABCNEWS.comDec. 4— It seemed to work well for

George W. Bush in the three presidential debates earlier this fall — lower the bar of expectations and raise the prospects for success.

The Bush camp is now asserting that the nation is on the verge of recession, a claim that ABCNEWS political analyst George Stephanopoulos says is more about politics than the economy.

“You know, the Bush people are really haunted. In 1992, they believed that the economy was coming out of a recession but President Bush was getting no credit for it,” Stephanopoulos said this morning on ABCNEWS’ Good Morning America.

Now, with Bush’s son the Republican candidate, “they don’t want to get caught in a reverse situation, where the economy is getting worse, people don’t know who to blame and [they] blame Bush when he gets [to the White House],” Stephanopoulos said.

The Texas governor and his advisers also anticipate that a weaker economy will make for easier for a Bush administration to enact its economic agenda, Stephanopoulos said.

“They are trying to build support for his tax cut in a recession and also place blame on [the Clinton administration] in case there is a recession,” he added.

‘A Great Number of Options’

The White House, naturally, rejects the notion that the next president inherits an economy on the front edge of a recession, an idea offered Sunday by Dick Cheney.

“We understand that Mr. Cheney has a lot of hands-on experience in big-time economic downturns,” White House spokesman Jake Siewert said today in response to a reporter’s question about the Republican vice-presidential candidate’s remarks. “But I don’t think that makes him qualified to assess the state of the economy.”

The economy “is in very strong shape,” Siewert said.

“A new administration, whoever heads up that administration, willhave a great number of options that weren’t available to thisadministration when it took office, because unemployment’s very low,the budget’s balanced … there’s just a much stronger economy to deal with,” Siewert said.

Timing Is Everything

Still, there are indications President Clinton will leave the White House with the nation’s record stretch of uninterrupted economic growth — now in its 10th year — at risk.

“How ever one looks at it, the economic data recently have beenquite negative and the possibility of a serious hard landing isrising,” says Allen Sinai, chief economist at Decision Economicsin New York.

While Sinai said he believed the chances of an outrightrecession — where economic growth actually contracts — remain small, he was concerned about a prolonged period of weak growththat would translate into rising unemployment.

David Levy, an economist at Bard College in Annandale-on-Hudson,N.Y., was even more pessimistic, putting the odds of a full-fledgedrecession next year at 70 percent.

“When you put all the problems facing the economy together, itis not a pretty picture,” Levy said.

“The economy was a good friend to the Clinton administrationand it is just not going to be as friendly to the nextadministration,” said Mark Zandi, chief economist at Economy.com,a West Chester, Pa., forecasting firm.

Economic Ship Springs Leaks

Economists are divided on the question of how low the economy will go.

The overwhelmingview among economists had been that the United States was headedfor a soft landing in which a series of interest rate increases bythe Federal Reserve would slow economic growth enough to keepinflation in check without tipping the country into a recession.

But since the Nov. 7 election, while the country has beentransfixed by the ballot battle in Florida, the economic ship ofstate has been springing leaks.

A series of government reports has shown unexpected weakness inareas ranging from consumer spending to factory orders.

The weaker economic data has added to pessimism on Wall Street,which has been on a stomach-churning ride for most of the fall. Thetechnology-heavy Nasdaq index has lost almost half of its valuesince reached record highs in March.

The concern is that the sharp fall in stock values will triggera cutback in business investment and consumer spending, two of themajor driving forces behind the current expansion.

Clinton had the good fortune of taking office as the country waspulling out of the 1990-91 recession. That period was called thejobless recovery because even though the economy was growing again,the unemployment rate was stuck at high levels — 7.5 percent in1992, which Clinton used with success against President Bush.