WASHINGTON The U.S.
economy continues to face a number of major obstacles, from
regulatory overreach to a swelling trade deficit with China,
but there also exist numerous "reasons for optimism," according
to Peter Morici, a professor at the University of
Marylands Robert H. Smith School of Business.
"These continue to be very, very
difficult times. I dont have to tell you that; you deal
with it every day. We have been through a terrible recession,
and youve heard that over and over again from this
administration and the last," he told attendees at the Steel
Manufacturers Associations annual members
conference in Washington.
"(But) even in this context, I
want to say there is remarkable reason for optimism about the
American economy and the American people," he said.
Moricis optimism about the
U.S. economy is based on several factors, including the shale
gas revolution, the repricing of U.S. labor, a strong higher
education system, the rapid pace of innovation and a revival of
the countrys manufacturing sector. "We still have the
most productive manufacturing sector in the world," he
At the same time, a number of
obstacles to growth remain. Among them are the European debt
crisis, regulatory and tax burdens, the trade deficit with
China and growing Social Security and state pension
obligations, he said.
"The state pension problems are
a festering problem just like Greek debt," Morici said.
As a result, Morici forecasts
some midterm growth in the U.S. economy, albeit not to the
degree most steelmakers would hope. He expects gross domestic
product (GDP) to rise 2 percent and 2.3 percent in 2013 and
2014, respectively, little changed from the 2.2-percent growth
rate seen in 2012.
On a quarterly basis, this
quarter looks likely to be the slowest of the year. Morici
expects GDP growth of just 1.8 percent, down from 2.5-percent
growth in the first quarter.
"The spring swoon is upon us,"
he said, predicting a stronger third and fourth quarter, with
growth rates pegged at 2.3 percent and 2.1 percent,
SMA president Thomas A. Danjczek
has previously said that the industry needs about 3-percent GDP
growth to maintain steel output at normal levels (
amm.com, March 4).
When asked by Danjczek whether
the U.S. economy could be gearing up for another recession,
Morici conceded that "economists are terrible at calling
recessions" but said the odds were likely less than 50
"I think the odds of a recession
in Germany are much higher," he said.