Reich: U.S. headed for 'day of reckoning'
SAN JOSE, Calif.--The United States is headed for a "day of
reckoning" as oil prices and the budget deficit remain high,
consumers keep spending and not saving, wages remain stagnant,
housing prices rise and the working population ages, warned Robert
Reich, former Department of Labor secretary in the Clinton
administration.
"The American economy is going to have to inevitably make a
structural adjustment (with regard to lack of consumer savings and
the budget deficit), or the entire world is going to suffer,"
Reich, an economist who is currently a professor at the Goldman
School of Public Policy at the University of California at
Berkeley, said during a keynote at the IDC Directions conference
here.
While the country is recovering from a recession in 2001 with
decent overall economic growth and a return of information
technology business, there are three storm clouds on the horizon in
the next year or two, he said. They are high oil prices, a $400
billion U.S. budget deficit, and record high levels of consumer
spending and record low levels of consumer savings.