In his Dec. 29 op-ed column, Robert J. Samuelson said that strong consumer spending can no longer be relied upon as the engine of this country's economic growth because of rising consumer debt, increasing interest rates, a costlier welfare state and the effects of globalization.
He left out another factor: Oil prices averaged $26 a barrel in 2002, $31 in 2003 and $41 in 2004. Prices are projected to be higher this year because oil supplies may be diminishing at the same time demand is increasing worldwide. This likely will drive the cost of energy higher for everyone.
As Mr. Samuelson pointed out, the dollar has depreciated 15 percent since early 2002 and will probably depreciate more as federal and consumer debt make dollars and Treasury notes less attractive to foreign investors and foreign central bankers. This could increase the cost of oil for Americans more rapidly than for others.
Mr. Samuelson further noted that the U.S. economy is resilient and innovative; however, this is at odds with our dependence on cheap energy. We are half as efficient in our energy consumption as Europe and Japan and therefore arguably twice as vulnerable to rising oil prices.
One also can reasonably question Mr. Samuelson's logic that a depreciated dollar can increase U.S. exports. During George W. Bush's first administration, the dollar declined in value relative to the euro more than 30 percent, while the current accounts deficit has nearly doubled. With rising energy costs, we have no guarantee that a depreciating dollar will result in increasing exports.