Foreign economists and executives are much less optimistic than their American counterparts about what is ahead for the US economy.
That divide showed up starkly and repeatedly in wall-to-wall conversations at the World Economic Forum, whose cast of more than 2,000 prominent people has been meeting since Thursday behind layers of security at the Waldorf-Astoria. While the US focuses on the economy's strengths, particularly the persistent consumer spending, the other delegates dwell on dwindling profits, mounting debt and the constant shrinking of corporate operations.
"What we have is an ordinary recession made worse by bursted bubbles, and the shakeout will last longer than the Americans seem to realize," said Kenneth Clarke, a Conservative member of Britain's Parliament and a former chancellor of the exchequer.
The disagreement is more than academic. Not only the US, but Europe, most of Asia and much of Latin America are caught in the first worldwide recession since the 1970s. In panel sessions and interviews, virtually everyone agreed that only the US has the economic heft to lift the others out of recession.
Unrealistic expectations
But economists, executives and government officials from abroad said Americans were unrealistically optimistic about how soon this would happen.
"It is not going to happen this year," said Klaus Zimmermann, president of the German Institute for Economic Research in Berlin. "A lot was invested in high-tech equipment for the new economy and that has to be used up before investment picks up and the American economy with it."
A turnaround is not yet visible in economic data. Corporate spending on offices, factories and equipment continued to fall in the fourth quarter, the Commerce Department reported last Wednesday.
This cutback caused the recession and now the question is when growth will resume. While American forecasters optimistically spy the resumption of corporate spending, the companies themselves continue to shed workers and facilities, prodded to do so because they find themselves capable of producing more than they can sell.
Excess capacity played a role in the decision of Kmart, the nation's third-largest discount retailer, for example, to file for bankruptcy late last month, in preparation for dozens of store closings and thousands of layoffs.
Still, the persistent optimism is understandable, several of the visiting foreigners suggested.
"It is the collective aspiration of what Americans want to have happen, particularly after Sept. 11, and maybe it will somehow be self-fulfilling," said Baba Kalyani, chairman of Bharat Forge Limited, an Indian manufacturer of truck parts, whose sales are down, particularly its exports to the US. "But I do not think the rebound will come very soon."
Stock prices worry Guillermo Ortiz, governor of Mexico's central bank. "American investors have been holding up stock prices in expectation of rising profits," Ortiz said. "Who knows if that will materialize. If it does not, you could have a pretty negative market reaction in midyear."
Europeans are particularly outspoken. "A lot of Europeans view American optimism as part of the character of the country and not necessarily reasoned analysis," said Peter Sutherland, the Irish chairman of Goldman Sachs International and a former top executive at BP, the British conglomerate.
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