Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, November 18, 1993 TAG: 9311220278
SECTION: BUSINESS PAGE: B-10 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
DATELINE: LENGTH: Long
The senior vice president for economic research at First Union Corp. said it is neither right nor wrong that Wal-Mart opened its big stores in many small communities and destroyed their economically fragile downtowns.
But the change was inevitable. A lot of jobs were lost in those small downtowns, Orr said, but Wal-Mart created more jobs than it cost.
Just so, it's futile to fight global trade and pacts such as the North American Free Trade Agreement, said Orr, who was in Roanoke on Wednesday to speak at a breakfast forum for about 150 corporate and commercial clients of First Union National Bank of Virginia. The key to the success of the American economy in the next generation will be exports, Orr said in an interview.
The Earth holds 5.5 billion people, he pointed out, but only a quarter-billion of them live in the United States.
``We need more people to sell things to,'' he said. And we are more likely to be able to sell more products more quickly outside the United States. Besides, most people here already have their goodies.
Americans, he said, have a lot to gain by trading with South America, Southeast Asia, China and Russia.
NAFTA, he said, is a symbol of ``whether we look to the future or futilely try to protect the past. No country has ever been able to do it.''
So we must figure out where our expertise lies - in telecommunications, software and information-age products - and ``sell them to the rest of the world.''
Those businesses and the health care industry ``are where jobs are going to be created,'' Orr said.
Other jobs will be lost, he said, but because of technological progress, not because of cheap foreign imports or factories going overseas.
That's neither good nor bad, he said, but it is inevitable.
A chart used recently by vocal NAFTA opponent Ross Perot showing the loss of manufacturing jobs vs. all jobs also is misleading, Orr said.
That drop in manufacturing began in the 1950s and 1960s when America dominated the world, he said.
Despite the decline in manufacturing, he said, American production and output have remained level.
``We changed from steel to computers.''
There was a day not too long ago, he said, when 25 to 30 percent of the American people were employed in agriculture. It was inevitable that the figure would fall to 2 to 3 percent now - and we still have plenty of food.
Orr said he wastes no time worrying about President Clinton. ``People, and the media in particular, are sort of down on Clinton and counting him out too early.''
What matters, he said, is what the economy will do in the last two years of his term, not the first two.
Orr recalled that President Carter's first two years saw the best U.S. economic growth since World War II. What people remember, however, is the stagflation of the final two years of his term.
By the time 1995 and 1996 roll around, he said, the economy likely will be doing better.
By then, Europe and Japan will bounce back from their recession, stimulating the U.S. economy much more than Congress could ever do.
Vacant apartments and offices will fill up, ending the problems with commercial real estate.
In 1995, Orr said, there will be an increase in the tax deduction for children ``as a family value measure.'' And by 1996, he predicted, there will be ``a middle-class tax cut.''
Before the next election, he said, there will be more money in the pockets of middle-class families.
[ORR'S FORECAST FOR 1994
]
Continued low inflation and interest rates, which is good for the housing industry and related businesses.
A slower rate of consumer spending because of lower income growth. A recent pickup in spending is due largely to fu
nds freed by mortgage refinancing, but there's a limit in the amount of additional spending it can produce.
Europe and Japan, where economies are in recession, will continue to have a negative impact on the U.S. economy.
Uncertainty about the Clinton
health care plan will keep job creation slow.
For the local economy, continued 1 percent job growth, the same as this year and far below the 3.5 percent of the mid-1980s. The key to improving the local economy is recruiting efforts for business and industry.
\ ORR'S FORECAST FOR 1994
\ Continued low inflation and interest rates, which is good for the housing industry and related businesses.
\ A slower rate of consumer spending because of lower income growth. A recent pickup in spending is due largely to funds freed by mortgage refinancing, but there's a limit in the amount of additional spending it can produce.
\ Europe and Japan, where economies are in recession, will continue to have a negative impact on the U.S. economy.
\ Uncertainty about the Clinton health care plan will keep job creation slow.
\ For the local economy, continued 1 percent job growth, the same as this year and far below the 3.5 percent of the mid-1980s. The key to improving the local economy is recruiting efforts for business and industry.
by CNB