Why the boom has not ended in bust

Article Abstract:

It appeared in summer 1998 that the UK economy would suffer a significant slump before the end of 1998. However, this does not seem to have happened. If this is the case, then it is important to determine why the consumer boom of the late 1990s did not eventually spark off the usual sharp decline as a result of the extensive policy tightening required to control it. One of the main factors was the new flexi-labour market, which prompted an early drop in wage pressures, thus allowing interest rates to be cut, and protected consumers from the usual increase in unemployment at a vital psychological moment.

United Kingdom, Market information - general, Economics, Research and Development in the Social Sciences and Humanities

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The Anglo-Saxon twins part company

Article Abstract:

Signs of an economic slowdown in the UK have led some observers to speculate about whether a similar development may soon emerge in the US. There has been very little evidence that the underlying supply side behaviour of the US economy has been stronger than that of the UK during the 1990s. Indeed, the US economy may be no better protected from the negative impact of a strong cyclical rise than that of the UK. The US should avoid allowing the rise in domestic demand to become too intense if it is to prevent the same end-of-cycle difficulties now being faced by the UK.

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Deficit spells trouble for the world

Article Abstract:

The world has so far been protected from a serious recession by the fact that Americans have been spending more than they earn, creating a trade deficit which has been financed by foreigners purchasing large amounts of US assets. The world economy could face a crisis if the US private sector decides to move back into large financial surplus. This does not have to happen, at least in 1999. However, the current period of private sector financial deficit will eventually come to an end, possibly as a result of a decline in the dollar.

United States, International economic relations, Business

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