FedEx CEO assesses where economy is now
Fred Smith on 'Special Report'
- Duration 8:55
- Date Mar 14, 2013
Fred Smith on 'Special Report'
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Tonight an overview of the US economy from one of America's movers and shakers.
Fred Smith is the founder and the boss of FedEx the global shipping giant.
He sees reason for both optimism and caution.
I started by asking Smith for his assessment on where the US economy is right now.
The US economic growth is relatively modest.
Our chief economist -- wind was a very good one.
Hesitant about 2% this year about 2.3 percent to.
-- Fourteen that's a long time off.
About 2.4 percent worldwide GDP growth this year maybe going up to 3%.
-- -- Lot of enthusiasm at the moment because some of the numbers that are coming out about housing and retail.
Sales and all -- are bit stronger.
But you also got the tremendous.
Because of the fiscal situation and the administration and congressional stalemate here in -- and it's very concerning to business and we have.
Which keeps hundreds of billions of dollars.
Of American companies money offshore and and not being invested in the United States we hear that word a lot uncertainty.
-- mean that's real for businesses sure of course.
I mean when you when you -- -- -- large enterprise where you have.
Lots of people's lives.
-- wrapped up in the business.
And your spending lots of money on on assets for the future.
Which is by definition unknowable you have to be cautious.
I can't imagine had to board level.
What the uncertainty does that mean the didn't natural.
Because if you're -- cautious.
You know you can go broke.
It's it's not like here of the government where you just print some more money so you have to take into account.
The scenario and that's what the people in March in and -- -- -- Enormous so uncertainty has -- cost.
And that cost is.
Restraint in terms of of the economic activity -- a couple things that you would say.
You would do to stimulate.
Well I think the most important thing the United States can do to stimulate the economy is number one continue to you.
This oil and gas revolution and we've been through in the last few years is fantastic.
It's lowering our need to import oil.
That money stays in our economy.
When we produce a barrel of oil or natural gas in this country we get about eighty or 90% of the benefit if we have to import.
Energy it's about a -- So it has a multiplier affect on our economy second we need to reform our corporate tax code it's unfair it's.
-- not productive most importantly it -- wage.
Capital investment and capital investment is almost perfectly correlated -- job creation.
It seems every year we talk about tax reform what's happened is other countries have a much more.
Sample and competitive corporate tax rate.
And we -- the highest now of all the industrialized countries.
And they tax -- at the corporate level.
Determines the level of capital expenditures to the top 1000.
Companies in the United States account for about 60% of all of the capitals the computers the planes to trucks that.
Factories and machines -- things that put people to work so we don't see any reason why the corporate tax rate.
Could not be changed so you know this town you talk to the administration you talk to Capitol Hill.
Miss any of that realistic I think it is realistic the president says he's for it I think the problem is.
They're trying to do.
Personal rates which the Democrats absolutely -- being lowered.
Or any of the exclusion like mortgage interest or charitable deductions being given up to lower them.
-- -- do think you could carve out the corporate.
Which only provides about 10% of the government revenues people are always astounded when they find that out.
So it's it's really.
Decision to keep our corporate tax rates at an uncompetitive levels when we could fix them if we just put him off for -- on the side and did it.
Do you think is as a businessman running a big company.
The nation's debt deficits are our problems of course there -- big problems.
They will become.
An enormous problem if the trajectory is -- change we're the world's reserve currency.
We have the ability to do things that other countries don't.
When we put.
Our dollars out there and there are tradable in the any good reason any other currency that you might have.
A lot of the problems that.
Other countries have around the world is they they don't have a reserve currency.
But it certainly.
Wealth that we have in this country.
Becomes problematic when you.
As much as your GD BG DP produces in a single year.
You're heading to China in a few days.
And obviously have.
A lot of business over there.
What's your sense of China and where things you have.
I think China is.
In the midst of a big change obviously they have new leadership.
That's just taken over.
China and the middle part of the the first decade of this century made some policy changes.
Which I think have been not good for the world trading system they promote.
Other companies that may be operating there and they call -- indigenous innovation.
They're trying to bill layer.
Our economy and in a -- or.
Managed fashion rather than opening up a lot of their markets which I think would be much better for the world and much better forward for China itself.
So they have number of of problems which there.
Very vocal about and trying to address and hopefully they will.
Liberalize some of these.
Things and and and be one of the great.
Locomotives is pulling the train of economic prosperity for the people around the world.
You look at your crystal ball -- -- if the United States can get its fiscal house in order.
-- given name energy revolution that's that's taken place.
I think that the prospect for new.
-- and he is very very substantial.
But most of the problems.
That the Democrats and the Republicans fight about in Washington.
Our most easily solved by.
Faster growth rates we can get -- growth rates up and that solves the physical problem.
Much faster and then in the any deal between the Democrats and Republicans.
Last thing -- have a big fan yes it's ten kids yes.
And warm -- daughters is a Hollywood producer she is.
Molly Molly yeah the blind side PS I love you and now she's doing the good lie with the Reese Witherspoon about the lost boys of Sudan is a great story.
And that's now and your family in the Hollywood bloodsuckers Q you were a star in yes I thought I thought I was in big part of -- cast -- -- 182 film -- can happen.
But Tom Hanks is the best in Bob zemeckis and billboard she did that movie and they -- used it.
The FedEx background of Tom Hanks in that it's a classic for sure had a convention -- didn't.
They did have to convince me to do and and and I was so bad they cut my part to eighteen seconds and put me on -- TV screens so.
I learned that I didn't have much future as a as a movie actor in -- Fred thanks so much thank you.