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Secretary's Speech


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Thursday. June 26, 2008


U.S. Secretary of Commerce Carlos M. Gutierrez
Interview, PBS Nightly Business Report

SUZANNE PRATT: The economy is still growing although ever so slowly. That's the word from the Commerce Department which reported its final reading on first quarter GDP showing just a one percent growth rate. Stephanie Dhue talked with Commerce Secretary Carlos Gutierrez about the economy and began by asking which poses the greater risk, slow growth or inflation.

CARLOS GUTIERREZ, U.S. COMMERCE SECRETARY: Well, you know for an economy to be healthy, we have to have three things. One is growth. The other one is manageable inflation, low inflation and then employment. And we have always said, the President always said we have to have all three. That's really the challenge is not doing one, but having it all in place. Right now, we need to confront energy prices and what the President has said is that we need to do a lot of things. There isn't one single big action that we can do. And that means exploring and producing more of our own—of our own oil. We can't be asking the world to produce more and to drill more and we're not willing to do it.

STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: To what extent do you think that institutional investors or speculators have played a role in the run-up of oil prices?

SECRETARY GUTIERREZ: We believe that this is a fundamental market problem, that demand has been growing faster than supply. Wanting to see other issues other than supply and demand can be a huge distraction. And we need to either increase supply and that is alternative sources as well as domestic oil production, or we need to reduce demand. And there is a bit of an inclination to want to blame things other than the fundamentals of how a market works.

STEPHANIE DHUE: Well, some people have a hard time explaining the fundamentals—say between $80 a barrel and $140.

SECRETARY GUTIERREZ: You know, supply has remained pretty static and in some cases we know that some countries are going to reduce their production. They're not able to produce more. The other thing that has an impact around the world is where demand is growing very rapidly. Subsidies are in place. Price controls are in place. Ironically, what we have seen is that that also has an impact on consumption and that also could have an impact on prices.

STEPHANIE DHUE: Here in the U.S., to what extent do you see falling home values and these rising fuel prices impacting consumer spending?

SECRETARY GUTIERREZ: Interestingly in the first quarter, the two biggest benefits to the economy, the two biggest contributors to our growth were consumer spending and exports. So consumer spending continues to grow, not at the pace we'd like to see, because consumer spending is growing at 2.5, 3 percent before that. But it's still growing.

STEPHANIE DHUE: We've been speaking to Commerce Secretary Carlos Gutierrez. Thanks for joining us.