INTRODUCTION >>>

For all the gloomy predictions earlier this year, particularly in the hi-tech sector, the economy in the US is proving remarkably resilient. While it may be too early for Americans, not to mention the global economy, to do more than breathe a sigh of relief, there are positive signs that the economy may be back on the path of upward growth.

Official figures for the first three months of the year confounded the doomsters by showing a bounce back in growth to an annual rate of two per cent, following a five-year low of one per cent in the final quarter of 2000. Meanwhile, the Organisation for Economic Cooperation and Development (OECD) is predicting that the global economy will recover rapidly, thanks to a pick-up in US growth later this year. And the US Treasury’s Office of Macroeconomic Analysis has reported indications that the economy has already bottomed, with little sign of the cumulative weakness that could drive it lower. Growth expectations have been boosted by an unexpected improvement in the US trade position. The US Federal Reserve has made cuts in interest rates and manufacturers have been rapidly adjusting their inventories.

The housing and motor manufacturing sectors, two areas where any cyclical weaknesses in the economy show up quickly, remain relatively strong. Personal incomes are still rising, although spending has been relatively subdued. The hi-tech and tourism sectors have both suffered the effects of the slowdown – indeed the decimation of the dot.coms and the plunge of the Nasdaq exchange were the forerunners of it. But both sectors are deeply entrenched in the modern US economy and their fundamental strengths suggest that any present difficulties are likely to be short-term. This report features snapshots of two cities and two states. As the Nasdaq makes its official move to the Big Apple and IBM celebrates positive results, Virginia consolidates its transformation from Old Dominion to Digital Dominion. As Las Vegas broadens its appeal beyond its glittering casinos, Florida counts the dollars from a record-breaking year of tourism and prepares for the summer season.

In the White House, President Bush has been working on a “substantive” $1.3 trillion tax relief package, which he believes will kick-start an economy that consumes 80 per cent of what it produces. The watchwords would appear to be “cautious optimism”.