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Economic Outlook for 2004
U.S. Economy
The good news is that a recovery of the U.S. economy is underway. GDP Growth was 8% in the last quarter of 2003 and is likely to continue at good levels in 2004. A major reason is that productivity is up 9%. Company profits also are up as is the stock market. And unemployment showed a small decrease from 6% to 5.9% in December. The bad news is that this appears to be a relatively jobless recovery. Wage increases are not keeping up with other indicators. The growth in the Federal deficit is a cause for concern and state and local budgets are under great strain. Another problem is that more people appear to be losing medical coverage each month. Most observers believe that recovery will continue in 2004 with some improvement in employment. Inflation will stay low. The Dollar will continue to fall against foreign currencies but this should cause exports to improve. Interest rates could increase because foreigners might stop sending dollars back to U.S. The shift to lower-wage jobs probably will continue. On the international side, globalization continues to be a controversial subject.
Globalization
Economists now question whether "free" trade is the absolute good it always had been assumed. The problem is that conditions in countries are so different that it is difficult to deal with environmental issues, transparency of business dealings as well as major differences in wages. Multi-national trade negotiations did not go well in 2003 with lack of agreement at Cancun in the World Trade Organization talks or in the American region talks in Miami . The U.S. is working on a series of bilateral trade agreements but they will not have the impact of the more global efforts. Outsourcing of jobs probably will continue to be an issue in 2004. More manufacturing jobs are moving to low wage countries and even technical jobs are moving to countries like India and China . The economic situation raises moral and social issues for Christians, particularly in this election year. Both parties will be running on claims that their platforms promote social justice but it is up to us to decide our views on the various proposals.
The main issue between the two major political parties is the appropriate role of government. The Republican position is that government should be as small as possible with the free market playing as important a role as possible. The Democrats believe that government should play a larger role in meeting the needs of the poorer elements of the community. We need to evaluate these positions when we vote. We as Christians also should express our views on globalization, i.e., how can a free climate for multinational companies, international trade and economic assistance be used to help achieve justice for poor countries.
Author: The Honorable C. Edward Dillery
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