Word: slowdown
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Dates: during 2000-2000
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...head again. The rushing tides of the new economy kept it submerged for almost a decade, but they could not drown it for good. It lives! Only it now looks like a pretty tame beast. A little slower growth in U.S. production, a little more inflation before the slowdown takes effect, a bit more unemployment, eventually, maybe...that's about the worst damage that the cycle is expected to inflict. Unless...
...Chairman Alan Greenspan has been raising interest rates for just short of a year to slow a runaway boom. Members of TIME's board differ considerably on how soon and how hard those rate hikes will bite. But all agree on two predictions: 1) there will indeed be a slowdown; 2) the chance that it will turn into a recession is, in Sinai's word, "zero." Diane Swonk, chief economist of Bank One and president of the National Association for Business Economics, declares, "I expect this expansion to last until 2004"--which is as far as she will predict...
...present there are signs a slowdown may be under way, but the economy's overall momentum is still quite powerful. Total production of goods and services rocketed ahead at an annual rate of 5.4% in the first quarter. That was below the superheated 7.3% pace in the previous three months yet still well above what the wildest optimists would consider a sustainable pace. However, Chris Varvares, president of Macroeconomic Advisers, a consulting firm with headquarters in St. Louis, Mo., expects a "fairly abrupt" slowing in the second half of the year to below 3%, which will hold gross-domestic-product...
Fundamentals too could turn against the dollar. The doomsday fear is that the Fed, in its zeal to head off inflation, will hit the monetary brakes too hard, causing a severe slowdown in the U.S. economy. That frightens away some foreign investment, causing the dollar to drop sharply. Then inflation rises despite the slowdown, prompting the Fed to crack down harder still, and so on around a truly vicious circle...
...TIME senior economics reporter Bernard Baumohl doesn't see any signs that Greenspan got any more than he bargained for. "The markets are having a little panic about how much this slowdown will affect earnings," he said (although investors warmed up again in the afternoon when Greenspan announced that technology -- gasp! -- was good for productivity). "But right now, it doesn't look like any more than the soft landing, from 5 percent growth to about 3.5 percent, that the Fed has been trying to engineer." In fact, says Baumohl, there are some on the Fed's Open Market Committee...