Snow: Economy near ´tipping point´ on wage growth
Thursday, January 5, 2006 10:58:47 PM
afxpress.com
Snow: Economy near 'tipping point' on wage growth WASHINGTON (AFX) - Treasury Secretary John Snow on Thursday credited the 2003 tax cuts with spurring economic growth and predicted that wage growth would soon pick up amid a tightening labor market
In remarks prepared for delivery to a U.S. Chamber of Commerce-sponsored forum, Snow said the economy is likely near a "tipping point" when it comes to wages
"Once businesses have been doing well for a while, they ultimately complete those increases in income away by competing harder for labor. The result is higher wages and higher standards of living for workers," Snow said
Snow highlighted a series of bullish economic indicators, including above-trend economic growth in 2005 and the creation of 4.5 million new jobs over the last two-and-one-half years
Snow's remarks come as the administration embarks on a concerted push to claim credit for economic growth. President Bush is scheduled to deliver a speech on the economy Friday in Chicago
Half empty or half full? But Democrats charged that Snow and the White House have offered an incomplete picture of the economy, charging that middle-class Americans have been left behind
"While there are some positive economic developments, the state of our economy for middle-class families leaves too many squeezed between falling wages and rising prices for everything from health care to college tuition," Senate Democrats said in a report issued ahead of Snow's speech
The report highlighted a number of unfavorable statistics, including rising college tuition fees, slow private-sector jobs growth compared to other economic expansions, and a decline in average, inflation-adjusted household income
Polls have shown many Americans feel insecure about the economic outlook. Snow, in his prepared remarks, said he agreed with a newspaper columnist that the press finds good economic news unexciting
The China issue In a question-and-answer session following his remarks, Snow said frustration with lawmakers and business leaders with China over currency levels, intellectual property theft and other issues was understandable, but emphasized that a measured response was in the America's best interests
"While we need to get China to make changes ... it's important not to overreact" or risk a "very negative reaction" in global financial markets, he said
Lawmakers have threatened to pursue punitive tariffs against China unless it takes action to allow its currency to fluctuate more widely against the U.S. dollar
The Treasury Department in November declined to name China a currency manipulator, a label that would have triggered negotiations and possibly retaliatory U.S. action against Beijing. In July, China revalued its currency by 2.1% and scrapped an 11-year-old peg to the dollar, replacing it with a basket of currencies. Experts saw the change as a small move and that the yuan remains significantly undervalued against the dollar |
