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Non-Tech : Tulipomania Blowoff Contest: Why and When will it end? -- Ignore unavailable to you. Want to Upgrade?

To: Oblomov who wrote (2675)	2/11/2000 11:06:00 AM
From: Sir Auric Goldfinger	Read Replies (1) \| Respond to of 3543

A sure sign of a top?: "No End in Sight for Economic Boom In U.S., According to Clinton Report By JOHN D. MCKINNON Staff Reporter of THE WALL STREET JOURNAL WASHINGTON -- The current economic expansion, the longest in U.S. history, can continue "indefinitely," a top adviser to President Clinton said in releasing the administration's annual economic report. "The fundamentals look very good," said Martin Baily, chairman of the president's Council of Economic Advisers. "As long as we stick to sound policy, there's no reason why it cannot continue indefinitely." Mr. Baily noted the expansion has been unique not only in its longevity but also its continued vitality. In a statement accompanying the report, President Clinton credited "fiscal discipline to help reduce interest rates and spur business investment; investing in education, health care, and science and technology to meet the challenges of the 21st century; and opening foreign markets so that American workers have a fair chance to compete abroad." The result, Mr. Clinton said, is a strong economy that is "well positioned to continue to expand and to widen the circle of opportunity for more Americans." What has been particularly surprising has been the increase in productivity as the expansion -- now in its 107th month -- continues, Mr. Baily said. In most expansions, productivity shoots up at first as businesses make more efficient use of their plants and workers. But in the current expansion, productivity has been growing steadily. "This pattern of strong productivity growth at a mature stage of the cycle is a key reason why this expansion is set to become the longest on record," the report says. One of the more surprising lessons of the current expansion, Mr. Baily said, has been that it is possible to increase reliance on both foreign trade and technology without penalizing lower-wage U.S. workers. That might be because technological change and openness have helped keep inflation low while boosting wages and pulling more people into the work force. But Mr. Baily said the administration expects some key indicators of growth to begin slowing soon. In particular, in its budget projections, the administration sees productivity growth slowing to 2% from the 2.9% average recorded from 1995 to 1999. Productivity is a measure of worker output per hour. High productivity growth inoculates the economy against the inflation bug in periods of rapid expansion because it allows businesses to absorb higher labor costs without raising their prices. The administration also expects consumer spending to slow somewhat. Consumer spending growth has been outstripping income growth for seven years, Mr. Baily noted. Even with somewhat lower productivity and spending growth, officials believe the economy can continue to expand. The administration expects inflation-adjusted growth of 2.9% this calendar year, down from 4.2% in 1999. For the remainder of the decade, growth rates are projected at 2.5% to 3.0%. As for the potential problems in the economy, Mr. Clinton has recently focused on the U.S. trade deficit. But the administration expects recovery of overseas markets to boost demand for U.S. products and services. The report also sees the potential for further efficiencies coming in the high-tech arena, particularly in e-commerce. Firm projections of the growth of retail e-commerce will have to wait for results of a current federal data-gathering initiative, the report said. But in the meantime, the report foresees the possibility of strong growth in the business-to-business portion of the e-commerce sector. According to a private estimate cited in the report, it could rise from $43 billion in 1998 to $1.3 trillion in 2003.