Solution to US Slump Twofold, Simple: DiMicco
The demand recovery required to stimulate job growth and pull the U.S. economy out of its prolonged downturn is right under politicians’ noses, according to Nucor Corp. chairman and chief executive officer Daniel DiMicco. “The reason we had a recession was demand disappeared. Here’s the challenge in front of us—it’s very simple—where’s the demand? How do we find demand in this kind of environment? The answer is staring us in the face,” DiMicco said in his keynote address Wednesday at the Steel Success Strategies XXVII conference in New York co-sponsored by AMM and World Steel Dynamics Inc.
DiMicco said the solution to lackluster demand in the Unit- ed States is twofold: Prioritize the rebuilding of America’s crumbling infrastructure and narrow the burgeoning trade deficit, particularly for energy and manufactured goods.
“When demand for goods and services is strong, the economy is going to be strong. It’s pretty basic stuff— even though I’m an engineer, I understand that,” he said. “So when nothing good seems to be happening in the U.S. economy or is happening at a snail’s pace, where does the massive increase in demand come from? It has been right in front of us since Day 1 of the crisis: It comes from two basic, currently available and pre-existing demand strong- holds that are there as low-hanging fruit.”
The first key to stimulating domestic recovery is a renewed focus on infrastructure, DiMicco said, noting that revitalizing the U.S. system could translate into some $400 billion a year of new demand over the next six years. “That’s demand that’s out there. It doesn’t have to be dug up or found, no magician needs to be summoned, no sorcerer, no fortune teller. It’s there. We just need to take action,” he said.
The second area that requires action involves the bal- looning trade deficit, DiMicco said. “The demand is there; the goods are being brought into the country in excess of what’s going out. We don’t have to create that demand. We just have to rechannel it. And when we’ve got that much unemployment, shame on us for not rechanneling it.”
By even conservative estimates, the United States could create some $350 billion in demand annually by reversing the trade deficit, meaning—when paired with the proposed infrastructure build—there is more than $750 billion worth of latent demand at the U.S. economy’s doorstep, he said. “That’s $750 billion in demand waiting to stimulate this economy. And we’re doing (nothing),” DiMicco said. “Where’s the leadership? I’ve been asking that question for at least four years.”
This article originally appeared on American Metal Market.