Economy Up Strong 4.8% at End of ’92 : Recovery: Consumer spending and exports were cited for gross domestic product’s best showing in five years.

A boom in consumer spending and better than expected export sales late last year led the nation to its strongest economic growth in five years--more evidence that the U.S. recovery is well underway, the Commerce Department reported Friday.

Gross domestic product--the nation’s output of goods and services--rose at an annual rate of 4.8% in the last three months of 1992, a significant upward revision from an earlier estimate of 3.8%.

“The important thing about it is that . . . the increase was both brisk and widespread, and we haven’t really had anything like this since 1987,� said Robert Dederick, chief economist at Northern Trust Co. in Chicago.

Despite the growth, inflation remained low. A key index showed that prices edged up only 2.9% in the fourth quarter.

The news gave Republican leaders ammunition to argue against President Clinton’s proposed $30-billion economic stimulus package. But supporters of the program said the stimulus is still needed because the growth has not been matched by new jobs.

California has not shared in the upbeat economic news. Beset by problems in its defense, real estate and construction industries and plagued by high costs, regulatory tangles and budget crises, the state’s output of goods and services grew only 0.5% in inflation-adjusted dollars in the fourth quarter of 1992, according to a previous estimate by the UCLA Business Forecasting Project.

The news on the national front appeared to validate arguments by former President Bush that the economy was on its way up without any help.

“He was exactly right,� said James F. Smith, a professor of finance at the University of North Carolina at Chapel Hill. “But he was the master of mistiming.�

Bush’s campaign for reelection faltered when voters saw little evidence to support his claims. On Friday, Bush supporters used the news to argue against Clinton’s proposed economic package, which includes higher income and energy taxes and some spending cuts.

“The Bush recovery is well underway,� Senate minority leader Robert Dole (R-Kan.) said in a statement. “The last thing we need to do now is threaten the ongoing recovery by adding billions of dollars to the deficit with a so-called economic stimulus package, which is really nothing more than a political stimulus package.�

For his part, White House Communications Director George Stephanopoulos said: “We’re very encouraged by the fourth-quarter numbers, but there is much to be done.�

Some economists argued that the growth, while impressive, was not likely to be repeated in the first half of 1993. They also noted that jobs have grown only about 100,000 a month, about a third of the job growth in previous economic recoveries.

Growth in output “does not mean that the economy does not need a stimulus,� said Stephen Levy, director of the Center for Continuing Study of the California Economy in Palo Alto. “Both exports and consumption are unlikely to continue at those levels.�

He added: “The growth in output didn’t translate into job growth, and that has a scary element: What do you have to do to get job growth and income growth?�

Recent polls have shown that consumer confidence has dropped, and the Purchasing Management Assn. of Chicago said its February index of manufacturing activity in the Midwest fell slightly to 60.8 from 60.93 in January.

Moreover, economists argued that slack economies in Japan and Europe will keep a lid on export growth in the first quarter. In a major foreign policy speech Friday, President Clinton said that U.S. growth depended on strong European and Japanese economies.

The reason job growth has proceeded at a sluggish pace: Output gains have come from increased corporate efficiency and productivity.

“That means the people participating in output and income did nicely, but those who didn’t, didn’t,� economist Dederick said. “I expect that the big beneficiary in the fourth quarter was corporate profits.�

Stephen S. Roach, co-chief economist at Morgan Stanley & Co. in New York, said new jobs will eventually follow. Increased productivity is “the key to the most powerful recovery of all, one which will eventually enable companies to regenerate many of the permanent jobs that have been lost.�

Though the fourth-quarter numbers were strong, they suggest that the recovery so far continues to pale beside previous ones.

In the seven quarters since the recession bottomed out in 1991, gross domestic product has grown at an annual rate of 4.1%--about half the rate of the first seven quarters of the last five recoveries, said Carol Carson, director of the Commerce Department’s Bureau of Economic Analysis.

Among the department’s other findings Friday:

* Consumer spending increased $39.3 billion in the fourth quarter, compared to $29.9 billion in the previous quarter. Consumer spending for goods in the fourth quarter was up $31.9 billion, $5.1 billion higher than originally estimated.

* Export sales increased $13.6 billion in the fourth quarter, compared to $12.5 billion in the third. The fourth-quarter figure was $8.3 billion higher than estimated earlier.

* Inventories also went up, as did spending on residential construction, which jumped $11.4 billion, or 26.1%.

GDP

Gross domestic product measures all goods and services produced by workers and capital located in the United States, regardless of ownership. 4th quarter: 4.8% Source: Commerce Department