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Top Business Journalist Forecasts 4% Growth For U.S. Economy In First Half Of 2005
Well-known economist and business-news anchor Stuart Varney is confident about U.S. position in global economy despite common concerns over oil prices, federal deficit
By JOANISABEL GONZALEZ-VELAZQUEZ
November 4, 2004
ORLANDO, Fla.Speaking at the Timeshare & Resort Investment Conference here from Oct. 25 to 27, well-respected business journalist Stuart Varney forecast 4% growth for the U.S. economy during the first half of 2005.
Despite concerns on Wall Street about record-breaking oil prices, rising interest rates, and a federal deficit surpassing $420 billion, Varney said the U.S. economy is the most resilient among industrialized democracies and will grow regardless of which presidential candidate takes office in 2005.
Varney, who was a founding member of CNNs business news team in 1980, said the perception that the U.S. economy has been declining over the past decade isnt entirely correct.
"In the 1990s, we thought the Japanese were leading due to computing and other technology [devices]. But the top five computer companies are U.S. companies, including Dell, Intel, and Microsoft," said Varney, who noted that the U.S. is also at the forefront of new areas such as biotechnology and nanotechnology.
"In addition," said Varney, "no other economy has been able to create 220,000 jobs a month. In terms of job creation, were still on track."
Varney, who has an economics degree from the London School of Economics, said managing inflation and the recent tax cuts would put money in peoples pockets, bolstering the economy.
Despite the economic difficulties, the U.S. economy remains on top in gross domestic product (GDP), noted Varney. This year, he said, the U.S. GDP will reach $11 trillion, while Japans will amount to $4 trillion, Germanys to $2 trillion, Englands to $1.7 trillion, and Frances to $1.5 trillion.
China is second in GDP, with about $6 trillion. According to news reports, Chinas GDP surged by almost 10% in the first half of the year, but slowed to 9.1% in the third quarter.
"China is the workshop of the world," said Varney. "They make it; we [the U.S.] consume it. Everything is made in China, from tablecloths to appliances, and we consume it while Europe and Western Europe are in the middle. China acts as a counterbalance to the American economy."
Varney noted, however, that demographic changes are presenting new challenges to countries, their governments, and their economies, requiring changes in their social policies, something CARIBBEAN BUSINESS reported on in its 2004 Annual Special Edition in February.
"I dont think countries can continue supporting current social policies due to low fertility rates. There have to be 2.1 births per 1,000 women of reproductive age to have economic growth. Many countries in Europe have low fertility rates; for example, Russias fertility rate is 0.9," said Varney.
He said the U.S. has a fertility rate of two, but its immigration policies have allowed a growing number of illegal and legal immigrants to join the U.S. work force, contributing to economic growth.
Varney noted, however, that the U.S. must pay urgent attention to other issues affecting its economic growth. These include rising healthcare costs, which prevent employers from creating more jobs, and a litigation-prone legal system that has caused companies to lose hundreds of millions of dollars in litigation currently. Varney serves as business contributor for Fox News channel.
This Caribbean Business article appears courtesy of Casiano Communications.