Jim, I have two comments on your observations. First, the GDP has been revised upward fairly vigorously recently. The 4Q99 number was revised upward by 25%, for example, so the 5.4% reported may be well over 6.5% or even 7% by this summer. Second, even though a 5.4% GDP is below the funds rate, which historically is what it takes for the economy to slow down, AG's target is 3.5 to 4%. Granted, this target may not account for productivity gains due to technology, but it does not matter, this is what AG has stated as the maximum we can have without inflationary pressures building. To get this he will need not a slowdown, but a recession. I don't believe he wants a recession, but neither do I think he is able or willing to go to Congress, or give speeches, saying he was wrong and the economy can grow faster than that without a conmensurate risk to inflation. So my bet is on a recession later this year, with (hopefully) a vigorous recovery by mid to end of next year. Bet the Chairman is making his teacher Ayn Rand flip in her grave. <g>
BWDIK |
