U.S. Commerce Secretary Don Evans says he is optimistic about the U.S. economy, despite the challenges of the past two years. His remarks contrast sharply with economists' predictions at the opening of the World Economic Forum in Davos, that a slowing U.S. economy could slip back into recession.
At a session reviewing prospects for the U.S. economy, Secretary Evans sounded a note of optimism. "Inflation being low really does give you a lot of room to continue to pursue pro-growth policies to keep interest rates down, which allows consumers, [and] allows businesses, to deal with their debt load," he said. "Also, it allows you to pursue pro-growth fiscal policies."
Secretary Evans dismissed concerns by some analysts at the Forum that the U.S. economy would find it difficult to sustain a war against Iraq. "We have a very resilient, flexible economy. A $10 trillion economy. And so, when you put that in the context of a war - again let me put great emphasis on the fact that our goal is to solve this issue peacefully and avoid war - but still, if you want to take that step, I've seen estimates of war costs of $40 billion to $50 billion. But, still, in the context of a $10 trillion economy, I expect our economy to continue to move ahead," he said. "I expect it to be resilient and flexible, and be able to deal with the impact of a war."
Some analysts say, war with Iraq could cause the U.S. economy to contract by 1.2 percent for several quarters, even if oil prices are high for only a few weeks. Officials from the oil cartel, OPEC, say a new Gulf conflict could edge the world toward an oil crisis.
Secretary Evans acknowledged that oil surplus capacity, which has dropped considerably compared with the 1980s and 1990s, is low - three-to-four million barrels a day above consumption of 80-million barrels a day. He said available, affordable energy supplies were key to long-term economic growth.