Battered by storms, starved for jobs and slowed by doubts about White House policies, the U.S. economic recovery is smacking into yet another obstacle: Many households, denied the usual windfall of a tax refund, are pulling back their spending.
"From clothing to appliances to automobiles to household furnishings," retailers will feel the pinch, predicts Mark M. Zandi, an economist with Regional Financial Associates in West Chester, Pa.
A consumer slowdown by hard-pressed taxpayers threatens to knock as much as one percentage point off the pace of the recovery this spring, said David C. Munro, an economist with High Frequency Economics, a New York consulting firm. In perspective, the economy's entire growth rate between January and March was just 1.8%.
In fact, the troubles of taxpayers already are chipping away at the economy's vital statistics.
On Thursday some of the nation's largest retailers reported lukewarm sales in April, a performance that many analysts believed was influenced in part by tax realities.
The refund factor is just the latest problem for an economy that has slowed markedly from its brisk 4.7% pace in the final three months of 1992.
In the last several days, the government said that the index of leading indicators, its chief forecasting tool, slid sharply in March, and that economic growth slowed dramatically in the first three months of this year. Other evidence, including gauges of consumer confidence and corporate purchasing plans, has been downbeat.
The view is not of a dying U.S. recovery. Rather it is of one that has failed to take flight in the manner of past upturns.
"Spending is going to improve--but I don't see any significant snapback that's going to gladden the hearts of retailers," warns Richard B. Berner, chief economist at Mellon Bank in Pittsburgh, Pa.
The reason: Fundamental problems continue to plague the economy. A meager jobs outlook hangs like a shadow over consumer attitudes and the ability of households to spend. Overseas downturns will limit the ability of foreign customers to buy U.S. goods in the coming months, and weakness in real estate continues to damage many regional economies in the United States, including Southern California.
On top of that, business executives and investors wonder about impending White House policies affecting regulation and taxes. And continued signs of a chilly economy play right into President Clinton's argument that a multibillion-dollar stimulus is needed, despite the expense.
