CITY AND SUBURBAN
When an irresistible economy collides with the world's markets
CHRISTOPHER FILDES
The world's biggest economy is going like a train and has collided with the world's markets. It is a bizarre spectacle. Look first at the train. A month ago all agreed that the US economy was speeding up. In the last quarter of last year it was reckoned to have been growing at an annu- al rate of 51/2 per cent, though that figure looked freakish. A fortnight ago in New York I talked to the economists of J. P. Morgan, who had done their sums again and brought the answer out at 7 per cent. Now that, I thought, really was freakish. It has proved to be an understatement. The official figure, out this week, is 71/2 per cent, and nothing like it has been seen for a decade. Alan Greenspan, chairman of the Federal Reserve, making his half-yearly appearance before Congress, was widely expected to bow left, bow right and milk the applause. He was content to say that the outlook was brighter than for many years. He did not need to say that this economy was more likely to need a touch on the brakes than a push in the back. If that is a worry, how the rest of us must wish we had it. With Japan and Continental Europe going nowhere, we can be glad of the example and grateful for a healthy export market. Better still, of course, if its new-found confidence could communicate itself to the President, and stop him behav- ing as if the US economy needed protec- tion and US trade needed managing. Per- haps Mr Greenspan could have a word with him. He could also explain that an econo- my which has worked up this sort of pace is going to consume more fuel, that increased demand will drive up the price, and that the fuel is money.
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