Bad Good News

To admit that the economy is perking up faster than anyone had expected would not move Congressmen to vote for his spending and tax cuts.

Thus, in his speech to Congress, that eternal sunny optimist Ronald Reagan spoke dolefully of "continued" double-digit inflation in the six months since his election, of "almost 8 million people unemployed," of mortgage interest rates, averaging almost 15%, keeping families from buying their dream houses.

Well, yes--but. The inflation rate dropped to 7.5% in March (down from 14% in November), and the unemployment rate has inched down from 7.6% just before the election to 7.3%.

Output of goods and services in the first quarter rose at a sizzling 6.5% annual rate, and worker productivity, which had been sagging alarmingly for more than a year, registered a surprisingly robust 3.9% rate of gain.

Even housing sales turned up slightly in March, despite those towering interest rates.

True enough, 6.5% growth is too fast to last. All forecasters expect a slowdown in the current quarter, but only the Administration is predicting an actual decline. True also, the inflation and unemployment rates still seem intolerably high by standards of the past. So Reagan had justification in portraying the economy as sick. If only it wouldn't look so damned healthy just as Congress prepares to vote on his budget.

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