A Deceleration About as Expected

Government figures last week confirmed that the 15-month-old economic recovery slowed somewhat during the second quarter. The loss of momentum was no greater than expected, and there are signs that the second half of the year may bring a new acceleration.

Real gross national product, the nation's total output of goods and services discounted for inflation, grew during the second three months of 1976 at an annual rate of 4.4%--less than half the first quarter's annualized rise of 9.2%. Reason: the first quarter got a lift from a switch by businessmen to restocking inventories they had sold off toward the end of 1975; that was not repeated. But "final sales"--sales of products that do not go into inventories--rose at an annual rate of 4.7%, 1% more than in the first quarter. Orders for durable goods gained 1.4% in June, less than in May but still a healthy climb. That, economists say, means the G.N.P. pace should pick up in the current quarter.

Inflation, meanwhile, continues to moderate. Consumer prices rose at an annual rate of 6.2% during June--slightly less than in May, though more than the average for the past three months. Most of the rise was accounted for by higher prices for food and fuel. That was anticipated; those prices actually dropped during the first quarter, a trend that could not continue. The current rise in food prices is expected to moderate. Excluding food and fuel, the Consumer Price Index rose at an annual rate of only 5.5% in the second quarter, an improvement over the first quarter's 7.7%.

Although the growth of personal income also slowed during June, partly as a result of the rubber workers' strike, the new numbers did not shake the Ford Administration's cheery view of the recovery. During the course of its midyear budget review, the Administration made official its widely reported new estimates for the year. Key predictions: real G.N.P. for all 1976 will go up 6.8%, prices in December will be only 5.3% higher than in December 1975, and unemployment may drop below 7% by year's end (it rose slightly in June, to 7.5%). All these figures are considerably more optimistic than the Administration's original forecasts, made in January.

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