Weather, Or Omen Of Recession?

The nation’s unemployment rate rose to 5.8 percent in January, highest since last spring, as severe winter weather dumped a new burden on an already hobbled economy.

The Labor Department said Friday that payrolls fell by 201,000, the most in nearly five years, largely because the mid-January blizzard closed businesses throughout the eastern United States during the department’s survey week.

“The Blizzard of ‘96 caused one of the biggest temporary layoffs in recent American history,” explained Labor Secretary Robert B. Reich. “But there’s no reason to suppose the economy is not moving forward.”

Joseph E. Stiglitz, chairman of the president’s Council of Economic Advisers, also dismissed much of the weakness as weatherrelated. He said the administration, which will release its new economic forecast on Monday along with its 1997 budget proposal, saw no threat of a recession.

“The basic economy is strong,” he said. “Is there any indication of a recession? The answer is clearly no.”

Many private analysts, however, said the report was just the latest in a series of data suggesting a weak economy.

“While the weather is part of the problem, excess inventories, consumers who have spent all their money and a stalled manufacturing sector suggest the absence of growth in the first quarter,” contended Jerry Jasinowski, president of the National Association of Manufacturers. “We are flirting with recession.”

Economist Marilyn Schaja of Donaldson, Lufkin & Jenrette Securities Corp. in New York agreed that “the real number is not minus 201,000.” But, she added, “When you take away the impact of weather, job creation probably was flat.”

Although rejecting any suggestion of a recession, Reich acknowledged the Federal Reserve interest rate cuts earlier this week, which were designed to invigorate a lethargic economy.

“Undoubtedly, lower rates put more money into people’s pockets and that in turn encourages people to go out and buy,” he said.