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FedEx, Cisco, Office Depot cautious on economy

Key business leaders expect slow and steady US economic growth but say longer term recovery depends on reforming health care and tax policy, and improving access to credit for small business.

“I think the recession has bottomed out,” Fred Smith, chairman and chief executive of FedEx Corp, told Fox News Sunday. “There's no question in our (FedEx) mind that the economy at least has stabilized, albeit at a lower base.”

Smith was joined on the program by Cisco Systems Inc CEO John Chambers and Steve Odland, chairman of Office Depot.

All three companies are barometers for sectors of the economy, and their comments come as G20 leaders meet in Pittsburgh this week to discuss the global economy and financial market reforms pushed by President Barack Obama.

Obama said in a CNN interview on Sunday that all signs point to a strengthening economy with improved financial markets and manufacturing output. But he was less optimistic on job growth for the remainder of the year.

The executives expect slow-to-moderate economic growth in 2010 but with caveats. They articulated goals for policymakers and Congress that play to the strengths of their companies and industries.

Odland said the banking and housing-led recession has dried up credit for small businesses, the heart of Office Depot's customer base.

“We're not going to see a job rebound until we see these small businesses get more access to liquidity,” Odland said, noting that small-business gains historically have allowed the economy to shake previous recessions.

Chambers, who heads the world's largest network equipment maker, said gave “very positive marks” to the Federal Reserve and central bankers for confronting the downturn. “I do think you're seeing the trends going in the right way,” he said.

On healthcare, Chambers said technology has to play a “much more aggressive role” in reducing costs and was not convinced the current proposals in Washington would provide answers.

“I think we have a ways to go,” he said.

Smith suggested mandated coverage for catastrophic care. “When I was young, there was no such thing as first dollar medical care or medical insurance. It was major medical,” he said.

Additionally, Smith said stimulating the industrial sector should require changes in tax policy, especially a reduction in the corporate tax rate of 38%.

“It's the highest in the industrialized world,” said Smith, who also recommended changes to enable corporations to expense capital investment. (Reuters)