This is a partial transcript from "Your World with Neil Cavuto," July 26, 2004, that was edited for clarity.

NEIL CAVUTO, HOST: Jack Welch (search) feels right at home here. He’s in his hometown. Just saw his treasured Red Sox walk all over the Yankees last night in Fenway and got to see his favorite candidate John Kerry do a little bit of pitching. All right. Well, two out of three ain’t bad.

With me now, the guy I like to call your world’s John Madden of politics this week, my friend Jack Welch. Jack of course is the former chairman and CEO of General Electric (search), the CEO of the consulting firm that bears his name, Jack Welch LLC.

Jack, they are off and running. They are very united here. They are saying things stink in this economy. How is that message resonating?

JACK WELCH, FORMER GE CHMAN & CEO: Well, you know, I think they are overstating the stink in the economy. I think what they are doing though is trying to make a case for security and that is going to be a long putt but I think that this is case they have to make, because they are jumping off the economic bandwagon that the recovery is clearly...

CAVUTO: There are some doubts about that. More on the economic team and we’re going to have former Labor secretary Reich and his argument has been June was more than a dip. It was a sign that we are reentering a double dip. What do you think of that?

WELCH: Well, I think it is too early to say that. It certainly slowed, but growth will be a good steady 3 percent in the second half at the bottom side of things and inflation is down and I don’t think those rates is going to run. So I myself think we’ll have a reasonable economy the second half and jobs will continue to be in place.

CAVUTO: Someone expressed on the floor today that the party hasn’t been rallying around a candidate like this since it was decided relatively early, since John Kennedy. You have been around a few elections. Is that so?

WELCH: It always sounds that way. This will sound like the most unified group in the world by the end of the week. It will be the same thing in New York. Look, these are the partisans. They are all here pounding the table. These people love this stuff and…

CAVUTO: I want to distinguish something Jack. I know they are partisan.  That’s what they do, but a lot of the platform problems that they thought they would have, they put it aside, they are so interested in winning that they are putting aside a lot of their differences. What do you make of that? That is a different kind of a Democratic party.

WELCH: Anybody but Bush has been a strong motivator for a lot of these people. The war has galvanized a lot of people. I think you clearly have a feeling of anti-war in the country and they are going to try and capitalize on it. Whether or not they can or not, is another question, whether or not they can portray themselves as the party of security is a question we’ll have to see unfold.

CAVUTO: While I have you here, the market, lately has been telegraphing either a slowdown or a stumbling. You know, the Dow is now down 5 or 6 percent, the S&P a similar amount. It’s losing a lot of energy. What is it telling us, anything?

WELCH: That people are scared. There is no question, you’ve got every day on television security concerns. This town is a fortified wall here, I mean, you can’t get through it.

CAVUTO: Difficult getting you in here. That was a battle.

WELCH: Thank God I knew some cops.

CAVUTO: There you go.

WELCH: But basically the town is emptied and everyone has been frightened away. So you’ve got concerns everywhere. I mean, I have a dermatologist that closed down for a week. It is ridiculous.

CAVUTO: This is bad! Let me ask you, what do you expect? You know the power of going to a shareholders’ meeting, rallying the troops, rallying your own troops. You know the pressure that’s going to be on John Kerry on Thursday night. What does he have to do?

WELCH: He’s got to be able to show that he can in fact create a more safe America, that he is a tough-minded, decisive, yes or no guy, not on both sides of every issue. He’s got a real challenge, as does Bush when his convention comes up. But he’s got a job to do. People aren’t sure that he can protect them, that he is tough enough, that he is really tough enough.

CAVUTO: Which wins out, the Iraq thing or the economy, if the economy has indeed stumbled again?

WELCH: Well, if the economy stumbles in some serious way, and the Iraq thing stays somewhat mellow, I would rather be Kerry than Bush right now if that were the case but I don’t think that is the way it’s going to play out.

CAVUTO: Your prediction.

WELCH: My prediction that the economy stays reasonably strong, that Bush continues to develop the post Iraqi plan and things work out for him.

CAVUTO: All right, so you liked the game last night at Fenway?

WELCH: It was the nuts. It couldn’t be better!

CAVUTO: And what about that ball John Kerry pitched, what did you think of that?

WELCH: It was a little weak, a little weak, bounced up there and…

CAVUTO: There’s a lot of pressure, a lot of people watching you.  Have you ever done that?

WELCH: No, I’ve never done that.

CAVUTO: Jack, any thoughts on just how to get the [Democrats’] message out?

WELCH: Well, I think you’re going to hear pounding on the job loss, first time since Herbert Hoover, but I don’t think that is going to be the issue. I think they’re going to have to make the security case.

CAVUTO: The security case being we’re safe, but we’re not safer than we were.

WELCH: Right. And we are going to be safer going forward. This is all about going forward. Are we going to be safer under a Kerry-Edwards administration or a Bush-Cheney administration?

CAVUTO: Let me ask you about where perception becomes reality. You were very big running GE to make people feel a part of the process, make them feel energetic and engaged. You have to give the Democrats credit here. They are doing that much. If you are in the Republican Party and you are looking at this do you worry?

WELCH: I think every time a party sees the other party at a convention, fear goes through their hearts. Conventions strike fears in the other party’s hearts. So, I think you are going to see that, Neil, and I think all this will settle down, one way or the other, after the Republicans have their day in August. And I think after that, I think those polls will be the most meaningful polls.

CAVUTO: Let me ask you, Roger Altman who could be a Treasury secretary in a Kerry administration was saying the CEOs with whom he talks are very upset about these deficits and it is a problem. Are you or the colleagues you talk to?

WELCH: No, I don’t think so. I think a good economy, some restraint by the Congress and the president and we are back in the ball game but we cannot afford to continue to have this spending go on at the same time we are lowering taxes. That just can’t go.

CAVUTO: Are you surprised this president has allowed it, that he hasn’t taken the veto pen out and stopped it or make a Ronald Reagan statement, you know.

WELCH: I think he has had chances.

CAVUTO: And why hasn’t he done it?

WELCH: You’ll have to ask him.

CAVUTO: But you are upset about that.

WELCH: Upset this is wrong word. I wish he did.

CAVUTO: If you were president, what would you be doing?

WELCH: I’d be doing what he is doing right now, I would be in Texas, to come out flying in August in New York.

CAVUTO: Yes, the terror issue, God forbid there is a terrorist incident. Does its timing affect the election more than what type of action it is?

WELCH: I think you can argue both sides of that one. Some people argue we’re going to need a strong president if that happens. Some people say it will prove he didn’t do the job.

CAVUTO: Do you think it is another Madrid type where they turn on the incumbent government?

WELCH: No, not Americans and I think the idea of the people who turned on the Philippine issue just created more issues, people in America understand you can’t fight terrorists with weakness. You can’t appease them. People in America really do understand that I think.

CAVUTO: Do you think that is how they perceive this ticket?

WELCH: Not yet.

CAVUTO: Not yet.

WELCH: I think this ticket could be perceived that way if they don’t get their message across.

CAVUTO: All right, Jack, thanks so much. We look forward to tomorrow. We’ll be back with you, right?

WELCH: I’ll look forward to it.

CAVUTO: You’re in our John Madden role, you realize that.

WELCH: I love it.

CAVUTO: There you go.

WELCH: I love arguing this thing with you.

CAVUTO: There we go. All right. Jack Welch.

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