News

News

NEWS USA

A weekly service provided to the American Chambers of Commerce in Europe

August 8, 2002

ECONOMIC NEWS

GROSS DOMESTIC PRODUCT: SECOND QUARTER 2002

The Bureau of Economic Analysis released advanced estimates, which indicate that the real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 1.1 percent in the second quarter of 2002. In the first quarter, real GDP increased 5.0 percent. The major contributors to the increase in real GDP in the second quarter were personal consumption expenditures (PCE), private inventory investment, exports, and federal government spending. The contributions of these components were partly offset by a decrease in nonresidential structures. Imports, which are a subtraction in the calculation of GDP, increased sharply. The deceleration in real GDP growth in the second quarter primarily reflected decelerations in private inventory investment and in PCE, a downturn in state and local government spending, and a deceleration in residential fixed investment that were partly offset by an acceleration in exports and an upturn in equipment and software. There was a sharp acceleration in imports in the second quarter.

U.S. SET TO GROW 3-3.5 PERCENT IN 2002

According to Treasury Secretary Paul O'Neill, the United States is on track to reach 3-3.5 percent growth in gross domestic product (GDP) in 2002. O'Neill urged Congress to grant trade promotion authority (TPA) to the president and pass terrorism risk insurance and the Bush administration's energy plan to spur more rapid growth. O'Neill issued his statement after the Commerce Department released new figures showing that U.S. gross domestic product (GDP) expanded at a 1.1-percent annual rate in the second quarter of 2002, down from a 5-percent rate in the first quarter.

THE EMPLOYMENT SITUATION: JULY 2002

The Bureau of Labor Statistics of the U.S. Department of Labor reported that the unemployment rate, 5.9 percent, and total non-farm payroll employment, 130.8 million, were unchanged in July. Again in payroll employment in services was partially offset by a decline in construction. Job losses continued to moderate in manufacturing, but the factory workweek fell. The number of unemployed persons (8.3 million) and the unemployment rate (5.9 percent) were essentially unchanged for the third month in a row in July. The jobless rates for adult men (5.2 percent), adult women (5.2 percent), teenagers (17.7 percent), whites (5.3 percent), blacks (9.9 percent), and Hispanics (7.6 percent) showed little change from the previous month. The number of persons unemployed for 15 weeks or more fell by 220,000 to 2.9 million in July. This measure had been trending steadily upward since June 2001.

PRESIDENT SIGNS TRADE BILL

On August 6 President Bush signed omnibus trade legislation which includes trade promotion authority. The Senate gave final congressional approval on August 1 to the bill that will strengthen President Bush's authority to negotiate and conclude international trade deals. Bush issued a statement calling the vote a "major victory" that will strengthen his efforts to pursue freer markets worldwide. The U.S. Chamber of Commerce also welcomed the news of a final Trade Promotion Authority bill. The 64-34 Senate vote followed a narrow 215-212 vote on July 27 in the House of Representatives on a compromise measure that includes a five-year renewal of trade promotion authority (TPA) for the president and of the Generalized System of Preferences (GSP) that provides lower tariffs for certain goods from developing countries. The measure authorizes a 10-year $12 billion expansion of Trade Adjustment Assistance (TAA) programs to aid U.S. workers who lose their jobs to foreign competition. For the first time, those workers will also be eligible for a tax credit to pay for 65 percent of health insurance costs.

AGRICULTURE SECRETARY OUTLINES U.S. WTO PROPOSALS

The United States is proposing a plan for reforming the rules of global agricultural trade, according to a July 26 press release provided by the U.S. Department of Agriculture. Secretary of Agriculture Ann Veneman described the plan during a meeting of agricultural ministers representing the United States, Canada, European Union, Japan and Australia in Nara, Japan. Specifically, the U.S. is calling for all members of the World Trade Organization (WTO) to reduce all tariffs. The proposed formula would reduce high tariffs more than low tariffs and result in no tariff over 25 percent after five years. The plan also calls for substantial increases in tariff-rate quota (TRQ) quantities and tightened rules on TRQ administration.

PRESIDENT BUSH SIGNS ANTI-CORRUPTION BILL

President Bush signed a bill designed to deter, expose and punish corporate crime on July 30. In a White House ceremony, Bush said the measure, crafted in response to a series of corporate accounting scandals over the preceding year and given final approval by Congress July 25, institutes "the most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt." The law requires chief executive and financial officers to personally vouch for the truth of their companies' earnings reports. It bars executives from buying and selling their companies' stock during periods in which company employees are barred from doing so. The bill authorizes additional resources for the Securities and Exchange Commission (SEC) to investigate wrongdoing. It also increases penalties for corporate obstruction of justice and for document shredding. The law authorizes establishment of an independent accounting board to set clear standards for the industry, investigate abuses and discipline offenders. It bars accounting firms from providing their clients with consulting services.

EXPORT CONTROLS LATEST

The White House has reportedly decided to make a major push beginning in the fall for Congressional passage of legislation reforming U.S. export controls. The Bush Administration supports legislation (S-149) approved by the Senate last September that would effectively make high-technology products already widely available outside the U.S. easier to export. A House bill (HR-2581), not yet approved, goes in the opposite direction and tightens export controls. The Chamber strongly supports export control reforms that are more modern and realistic and do not put American companies at a distinct disadvantage in world trading markets.

PRESIDENTIAL NOMINATION

President Bush announced July 31 his intention to nominate Nancy Jacklin to serve a two-year term as the U.S. executive director of the International Monetary Fund (IMF).