Congressman Pat Tiberi's Capitol Notebook

CONGRESSMAN PAT TIBERI'S CAPITOL NOTEBOOK

WASHINGTON-Attendees at the annual Washington Conference that Congressman Mike Oxley and I hosted last week received an up-close-and-personal briefing on the economy from two of our country's top decision makers.

Federal Reserve Chairman Alan Greenspan admitted to our group that up until now, job and wage growth have been "extraordinarily weak" in the face of the economic growth we've experienced. According to Greenspan, a primary reason is the tremendous growth in productivity. Productivity, the output of goods and services per worker, is a double-edged sword. The increase we've experienced has helped keep costs down, but it has also meant that until recently, businesses have not had to hire new workers.

Partly in response to the corporate scandals for the last few years, the profits generated by productivity growth have been used to strengthen corporate balance sheets.

In previous recoveries, Greenspan pointed out that businesses would hire in anticipation of a recovery. This time, new employment and wage growth are being "dragged along" by the recovery.

But there are now signs of a turnaround.

"Employment is finally picking up," Greenspan reported. "Real wages are picking up as companies bid for employees."

While the first signs of inflation are on the horizon, Greenspan told our group that he did not see a need for pre-emptive action that could do more harm than good. The inflation rate has been so low that even if there is a bit of a rise, the Federal Reserve has time to assess its affects.

Commerce Secretary Don Evans was even more upbeat in his economic outlook. He said the economy was as strong as he can remember, adding that "the long term fundamentals are as sound as I've ever seen them."

Evans says the reports he hears from manufacturers across the country-"small, medium or large"-are also very positive.

"You can't be anything but optimistic" about the future of the economy, Evans told our group.

Evans still has a short list of "to do" items that would better the chances of continued economic improvement. First, the tax relief we've enacted needs to be made permanent. Second, Evans called for lawsuit reform. What he called "junk lawsuits" are helping to drive up health care costs that businesses face.

I agree with Secretary Evans. Especially at a time when competition in the global economy is so intense, we need to ensure American businesses are not at a disadvantage.

The annual Washington Conference is an event I wish every Central Ohioan could attend. It's a tremendous opportunity to hear from and ask questions of our country's top decision makers. We'll be doing it again next year, so if you want to participate, just let my office know.