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Time - Man of the Year
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Time_Man_of_the_Year_Compact_Publishing_3YX-Disc-1_Compact_Publishing_1993.iso
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1992-10-19
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D= ╚BUSINESS, Page 46Will Japan's Slump Stifle a U.S. Recovery?
Ever so slowly, the U.S. economy is reviving. The most recent
sign came last week when the government reported that retail
sales surged in January and February by 2.1% and 1.3%
respectively -- the first back-to-back increases of more than
1% since 1985.
But will the stall in Japan spell trouble for the fragile
American economy? Last year American companies shipped $48.1
billion worth of goods to Japan, making it the second largest
U.S. export market. A recession in Japan could hurt the recovery
by slowing demand for American products. In addition, Japanese
businesses could try to bolster sagging domestic profits by
aggressively selling more products overseas, an action that
would surely worsen trade tensions. Finally, since Japan helps
finance the U.S. budget deficit, some fear that a significant
curtailment of Japanese investments in the U.S. could drive
interest rates higher.
It won't happen, say experts. "The slowdown in the
Japanese economy will not hurt the U.S. very much," observes
Robert Wescott, senior international economist at the WEFA
Group, an economic forecasting firm. "For political and economic
reasons, Japan wants to maintain a solid relationship with this
country. They will try to keep up imports from the U.S." The
brunt of the Japanese recession will be felt in Asia and Europe.
Though Japan has been buying less from the world market
over the past year, imports from the U.S. remain firm. And
there is no evidence that Tokyo intends to unload goods on the
American market as a way to offset slumping sales at home. The
Big Three, for example, are relieved to see that Japanese
automakers plan to raise prices on cars sold in the U.S. in
order to boost profits.
Fear of a massive retrenchment from the U.S. market by
Japanese investors is also unfounded. Japan has been earning
huge trade surpluses lately by buying less abroad and keeping
exports high. In February it sold $10.23 billion more goods
overseas than it bought, the biggest monthly surplus in history.
Much of that excess capital should flow right back into the U.S.
through purchases of stocks and bonds and by other forms of
investments. Last week, for example, Sony began hiring for a
TV-assembly plant it is opening this summer outside Pittsburgh
that will eventually employ 1,000 people.