TEXT OF INTERVIEW
Bill Radke: A lot of people are looking back at 2009 now, but do you really want to relive that year? Let’s look forward with our regular commentator, former Labor Secretary Robert Reich — good morning.
Robert Reich: Good morning, Bill.
Radke: We’ve got to start with jobs. What do you expect for employment in 2010?
Reich: Well, the news is probably going to be pretty good, employers will start hiring again. Not because of a big pick-up in demand, but because companies will start replacing inventories and consumers will have to replace cars and appliances that have worn out. Also because the government is still going to have a lot of stimulus spending to go, and the Fed has no intention of raising rates any time soon.
Radke: And speaking of interest rates there, where are you on the great inflation debate?
Reich: No worry there — whether it’s something like Japan going into deflation or Dubai defaulting on its debts, global investors will continue to seek the safety of the dollar. Which means we’ll be able to continue to borrow from the rest of the world at very low interest rates.
Radke: So what is your biggest worry for 2010?
Reich: It’s American consumers. They’re 70 percent of the economy, and they still won’t be in a mood to buy. Their jobs are continuing to be precarious, their homes still worth less than they were two years ago. They’ll have to get out from under lots of debt, and there’s not going to be enough purchasing power to support a strong recovery in 2010, maybe not even in 2011.
Radke: You did mention being worried about our abounding federal budget deficit.
Reich: Well, I’m not. Actually as consumers and firms continue to cut their debt loads and state governments are still slashing jobs and raising taxes, which they will do in 2010, the federal government may have to go even deeper into debt just to keep the economy on track.
Radke: What about the stock market?
Reich: I expect a correction. The market is way ahead of the real economy right now, so I’m a little concerned. This can’t go on for long.
Radke: So Robert, when we have this discussion a year from now, where do you think our economy’s going to be overall?
Reich: I expect better than we are today, Bill, but I’m afraid not by much. I wish I could be more optimistic, but that’s my honest prediction.
Radke: Fair enough. Former Labor Secretary Robert Reich is now a professor of public policy at the University of California at Berkeley. A happy new year to you, Robert.
Reich: Happy new year to you, Bill.