Summary:"What a difference a year makes." Donald Straszheim chose to emphasize this point in his opening remarks about the U.S. economy. Pointing to the year-to-date differences in various economic indicators, including the NASDAQ which was at 5,048 points last year and 1,890 points today, Straszheim asked fellow panelists what they thought these changes meant for the U.S. in the months and years to come.
Byron Wien addressed the drop-offs in the stock market and other indicators by taking the position that we are only at the very beginning of a longer and deeper recession than believed by most Americans. Wien and Douglas Cliggott both suggested that the cause of the recession is Americans′ insistence on spending more than they earn over the last several years, both as consumers and as businesses. This kind of behavior, Cliggott pointed out, is what gave us the extraordinary growth that we have been experiencing and will be a central cause of a tremendous slow down of the U.S. economy in the coming years. Cliggott commented that "maybe we need to save a little the old fashioned way" instead of spending money that we do not have.
In stark contrast to Wien and Cliggott, Ronald Hill said that we are not in a recession. He pointed to the fact that the money supply is growing three times faster than nominal GDP as an indicator that the U.S. economy is not in trouble. Hill went on to say that we need to look at the key indicators not compared to what they were a year ago, but how they are relative to U.S. economic history. When taking this approach, Hill said, we can see that things are not as bad as they seem.
Shifting to the role of the "New Economy" and technology, Steven Milunovich said that the country was caught up in the belief that the "dot-com" companies were going to change the entire economy when that was not truly the case. John Beck had a different take on the economic situation in the U.S. entirely. He suggested that the driving forces behind the economic slowdown are not the "dot-com" busts or "over spending Americans," but rather the demographic changes occurring in the U.S. Beck said that as more young Americans are getting married and starting to save money for their future families, they will not be providing companies with the same amount of revenue that they have collected in the past.
Ultimately there was no clear consensus on why the U.S. economy is struggling or whether it is even struggling enough to be termed a "recession."
In the closing minutes of the panel, Straszheim asked Thomas Higgins of Edison to describe what happened in California that brought us to the current power crisis. Higgins said that the reason for the crisis was not deregulation, but rather "poor regulation and bad politics." The regulators and policymakers, according to Higgins, expected the utilities to somehow be able to bear the brunt of increased prices from suppliers of energy without increasing the costs to consumers. Cliggott commented that California had neglected to invest in the building of new infrastructure (e.g. power plants, oil refineries). Higgins summed up the California power crisis by noting that it is a clear case of why "politics shouldn′t commandeer markets," which was greeted with nods of assent from his fellow panelists.
