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US, China will dominate global economy: Morici

Keywords: Tags  Peter Morici, Steel Success Strategies XXVIII, economic outlook, University of Maryland, SSS, Corinna Petry

NEW YORK — Innovation and the ongoing technological revolution will continue to help developed industrial countries reinvent themselves and compete in the global marketplace, according to University of Maryland economist Peter Morici.

This is one reason that American manufacturers, including steelmakers, can maintain a degree of optimism in the face of a sluggish global economy, Morici said at the Steel Success Strategies XXVIII conference in New York sponsored by AMM and Englewood Cliffs, N.J.-based World Steel Dynamics Inc.

Commercial interests in the United States are always coming up with new products and methods of production, Morici said, noting that "innovation continues at a strong pace."

Shale drilling will revolutionize energy trade not just in North America but also in Europe, Morici said. "Shale gas is all over Europe, and when they tap it they will be energy-independent, too." And if Japan taps seabed crystalline hydrate, natural gas trapped beneath the ocean, "they’ll become energy independent" and less reliant on nuclear power, which has fallen into disfavor since the March 2011 Fukushima Daiichi disaster, Morici said.

The primary epic story of the 21st Century will be the struggle for dominance between the United States and China, Morici said, noting that despite the seeming ascendance of China, the United States "is not nearly done" and "the landscape is littered with the broken careers of those who said otherwise."

In the longer term, Morici estimated that the U.S. economy could grow 4 to 5 percent per year, while China could achieve 5 to 7 percent annual growth. European and Japanese growth will be closer to 3 percent, and emerging economies will grow by about 4 to 5 percent, he predicted.

Domestically, capital remains on the sidelines, but "if we built out the potential that a manufacturing resurgence required, American growth would be very good," Morici said.

On the issue of labor, Morici said that "the U.S. is founded on competition and our open door" and argued that "the U.S. is able to absorb all its immigrants while debating endlessly about whether that is desirable." In contrast, he cited Japan, where shrinking families and resistance to immigration have triggered a population decline and economic problems. The Japanese government should promote marriage and children or accept immigration, Morici said. "Until one of those changes, Japan will continue to struggle."

Morici said that Europe’s woes are not likely to clear up soon. "Why should things get better next year?" he asked. "What new industry is going to take unemployment in Greece below 25 percent?"

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