The Economy: Corset for a Fat Lady

The U.S. economy has been expanding so rapidly that Arthur Okun, chairman of the President's Council of Economic Advisers, last week had to reach a long way for a suitably descriptive simile. He settled for "a fat lady munching candy." Said Okun: "Nobody can promise her a lovely figure overnight if she stops nibbling, but the more she overindulges the more serious the risks become."

The risks that were worrying Okun—inflation at home and a threatened dollar abroad—last week prompted the Federal Reserve Board to give the nation its third dose in five months of some painful economic medicine: higher...