To: Scumbria who wrote (133583 ) 2/26/2001 1:20:17 PM From: hmaly Read Replies (1) | Respond to Scumbria RE...First he won come-from-behind victories on deficit reduction and the North American Free Trade Agreement. Then came a global trade agreement that may help boost U.S. exports in the long run. <<<<< http://www-tech.mit.edu/Bulletins/nafta.html That's because the recovery remains in the throes of two distinct economic cycles, the TIME panel agreed. On the one hand, the U.S. has clearly rebounded from the 1990 slump as low interest rates and the release of pent-up consumer demand have set off a run on such big-ticket items as houses and cars. On the other hand, the payroll slashing that dates back to the 1980s remains in full force as U.S. corporations strive to compete in world markets. Even the boom in business investment, which has boosted economic growth, has gone largely for computers and other labor-saving devices rather than for job-creating new factories and machinery. "The fixation of the moment continues to be on downsizing and cost cutting, whether it's through machines or layoffs, and that fixation remains very intense," says Stephen Roach, co-director of global economic analysis for Morgan Stanley. "I don't think it's going to subside."<<<<<<<<<< Despite such crosscurrents, the U.S. has been growing far faster than its industrial allies and promises to widen the gap in 1994 as both Japan and Europe remain mired in slumps. Yet that could set the stage for stronger U.S. growth in 1995 once Japan and Europe begin to recover and increase their purchases of American exports.<<<<<< The economists also said the burden of higher taxes on the economy would be far outweighed by the benefits of falling oil prices and low interest rates. "The tax increase is easily absorbable and is not going to derail the economy," said Meyer.<<<<<< Another important variable is whether recent improvements in U.S. productivity will continue in 1994. Productivity, which measures the hourly output of workers, had increased less than 1% a year for most of the 1980s, hurting U.S. competitiveness. But productivity grew a healthy 1.5% last year, after surging about 3% in 1992, as downsized companies ran their plants and offices with fewer workers.<<<<< For now, the economists agreed that the U.S. economy will continue to show solid growth over the next two years. Yet the timing of the economic cycle could cause trouble for Clinton if the aging recovery begins to fade in 1996 when he runs for a second term. "The problem for Bill Clinton is, we're going to have a good 1994 and a good 1995," Jones said. "But look out, Bill, for 1996." However, for Americans who have endured three years of the leanest economic recovery on record, the prospect of two reasonably fat years looks just fine, thank you.
