The United States economy will keep growing and is just starting to add significant new jobs, Commerce Secretary Don Evans said on Friday at the World Economic Forum in Davos, Switzerland.
His upbeat forecast — before an audience of business leaders worried about US trade and budget deficits and the weakening dollar — got a swift rebuttal from top American trade union leader John Sweeney, who said good jobs were leaving the US in a ”tidal wave” of outsourcing.
”I think it’s now becoming clear that the pro-growth monetary and fiscal policies that have been pursued in this economy … for the past three years are working; they’re taking effect,” Evans said during a panel discussion at the forum in this Swiss ski resort.
”Jobs are beginning to come,” he said, noting that the economy added about 250 000 jobs in the fourth quarter and that the unemployment rate had already ”peaked” and fallen to 5,7%.
Despite strong US growth in recent months, companies have been reluctant to add new workers — raising worries about whether consumers will keep spending and pushing growth ahead. The panel was devoted to whether US growth would recover strongly enough to help the rest of the world — particularly Europe, where growth has been more modest.
Growing US Budget and trade deficits are another source of worry, because they undermine the dollar and make people wonder whether they will even out smoothly or by roiling financial markets.
Evans reiterated that President George Bush’s administration planned to cut the Budget deficit in half over the next five years and said it wasn’t out of line as a percentage of gross domestic product.
Evans’s upbeat view was seconded by Harvard economist Martin Feldstein, who said he was ”convinced the number of jobs will increase significantly in 2004” and foresaw growth of more than 4%.
Feldstein, one-time adviser to Republican president Ronald Reagan, cited lower US first-time unemployment claims, which showed that ”we’re no longer seeing the layoffs that have contributed to slower growth in the past”.
Top US labour leader John Sweeney, who as president of the AFL-CIO labour federation is a leading critic of Bush, said better growth numbers weren’t helping workers: ”Yes, growth is up but neither jobs nor wages have recovered … Everyone who isn’t rich is living pay cheque to pay cheque.”
Good jobs were going overseas and new jobs in the US didn’t pay as much as the old ones, he said.
A less technical explanation came from Alston Correl, chairperson and chief executive of Georgia-Pacific, maker of building materials and paper products.
He declined to make concrete forecasts but said simply that ”right now, things feel better than they did yesterday”.
Georgia-Pacific was uniquely positioned to know consumer travel and spending habits, he said.
”One of the things about the bathroom tissue industry is that you know where people are at any given time.” — Sapa-AP