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Snow: Economy set for 'take-off'
Treasury Secretary sees stronger GDP growth, hiring, business spending in second half.
July 22, 2003: 8:08 PM EDT

NEW YORK (CNN/Money) - The U.S. economy is poised for stronger growth and job creation in the second half of the year, Treasury Secretary John Snow said Tuesday.

In an interview with Lou Dobbs on the Lou Dobbs Tonight program on CNN, Snow said he expected gross domestic product (GDP) to grow at a significantly higher pace in the second half of 2003 and in all of 2004, which would help finally end the longest labor-market slump since World War II.

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Treasury Secretary John Snow tells Lou Dobbs that the economy is on track for stronger growth during the second half of this year.

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"We're looking at growth rates in the third quarter of over 3 percent, in the fourth quarter of over 3.5 percent, and [in all of 2004] of over 4 percent," Snow said. "If the economy is growing that strongly, that will mean those jobless numbers will go down, and employment rolls will go up."

"I think the recovery is under way, and the economy is poised for a good take-off," Snow said.

The National Bureau of Economic Research, a highly respected group of economists that declares the beginning and ending dates of recessions, said the latest recession, which began in March 2001, ended in November 2001.

But GDP growth, the broadest measure of economic strength, has been weak in recent quarters, managing only a sluggish 1.4 percent rate of growth in the first quarter of 2003, the latest data available. And the nation's unemployment rate has climbed to 6.4 percent, the highest since April 1994.

Growth has been so sluggish, in part, because U.S. businesses are still feeling the effects of a hangover from the boom days of the late 1990s. Many companies over-extended themselves and over-invested in new equipment, leaving them with little appetite for further spending.

Snow, who has been one of the Bush administration's biggest boosters of the notion that a recently passed tax cut will spur economic growth, said companies have finally shaken off the effects of the technology bubble and were ready to spend money again.

"We have a corporate structure that's leaned out -- inventories are tight as a drum, corporate America is very productive, and they've taken a lot of costs out," Snow said. "So when the economy comes back, I think we're going to see a nice pick-up in profitability and cash flows -- and that's always the precursor of expansions in capital spending."

Some economists worry, however, that companies will not start significantly expanding their businesses -- or hiring new workers -- for several months.  Top of page

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