8-18-2001: WASHINGTON (Reuters) - White House economic adviser Lawrence Lindsey predicted that the United States would avert a recession as economic growth gradually picks up over the next two quarters.

Lindsey told the Washington Times newspaper in an article published on Saturday that he expected the nation's gross domestic product for the current third quarter to be higher than the meager 0.7 percent growth rate in the second quarter.

``The second quarter is going to be the weakest,'' Lindsey said. ``The third-quarter growth will be a little higher; so will the fourth quarter, when we will begin to get back to a more normal rate of growth.''

``We're skirting a recession, but I think we'll avoid it,'' he added in the interview.

Lindsey attributed his more upbeat outlook to the stimulative effects of President Bush's tax rebates, the Federal Reserve's interest rate cuts and more moderate energy prices.

The U.S. economy has experienced a brutal slowdown in capital spending and a deep recession in manufacturing. But consumer spending, which makes up about two-thirds of economic activity, has held up.

Next week, the White House's Office of Management and Budget is expected to release new budget estimates for this fiscal year showing that Social Security surpluses will be about $157 billion to $160 billion.

The operating budget surplus is expected, however, to be ''in the single digits,'' Lindsey said.

Democrats in Congress blamed Bush's $1.35 trillion, 10-year tax cut for dwindling non-Social Security surpluses.

Lindsey attributed the decline to falling corporate profits, and insisted that Bush's tax cuts were justified.