Transcripts

"Money File"-The American Economy's Reality Check

SUSIE GHARIB: In the "Money File" tonight, the new reality for America's economy. Here's Eric Schurenberg, editor in chief at BNet Moneywatch.

ERIC SCHURENBERG, EDITOR IN CHIEF, BNET MONEYWATCH: Remember how sure we once were about the U.S. Economy? Our tech sector led the world. Wall Street housed the smartest money wizards and our consumers carried the global economy on their free-spending shoulders. Well, things look different now, don't they? It's hard to be so confident about what lies ahead. But here are three forecasts. First, growth will settle at a lower rate. For the past 20 years, economic output grew about 3 percent a year. That now looks unsustainable. First of all, 70 percent of GDP is powered by consumers and consumers have been spending more than they earned for too long. We joked we'd shop 'til we dropped. Well, we've dropped.

Second, taxes will rise. There is no other option. We don't know whether Washington's stimulus plans will work, but we do know they have to be paid for. So will Social Security and Medicare and any Obama health plan. And raising taxes won't help the economy grow. Still in spite of it all, America will remain top dog. The U.S. is still ranked first in competitiveness by the World Economic Forum. China comes in 30th. And in sheer throw weight, the U.S. economy remains the world's giant, more than three times the size of number two, Japan. No way can China catch up in the next 10 years. Yes, we've lost prestige. We're not going back to the growth rates of the past. But on the far side of this crisis, you'll still find a vibrant economy where you can make a future for your family. And that's the point, isn't it? I'm Eric Schurenberg.