Mom-and-pop consumers have kept the U.S. economy mostly immune to the Asian contagion, with the increase in domestic consumption offsetting declining growth in exports. "Although the economy has entered 1999 like a locomotive at full speed," says Baumohl, "rising long-term interest rates will probably slow it down by the second quarter of this year." But thus far, nobody's told the consumers. Either that, or they're partying like there's no tomorrow.
Uncle Sam needs Americans to buy, buy, buy, and they've been responding like true patriots. According to Commerce Department figures released Friday morning, a 14-year-record 4.8 percent increase in consumer spending buoyed the economic growth rate to an astonishing annual rate of 6.1 percent in the last quarter of 1998. The economy's exceptional performance in the face of a global downturn has Wall Street worried, though: "Even though there's been astonishingly little inflation, the Fed has to play it safe," says TIME senior business writer Bernard Baumohl. "The economy is growing at twice the 'speed limit' at which economists believe inflation can be avoided, and that may prompt Alan Greenspan to raise interest rates as early as next month." The Dow lost 33 points in Thursday's trading amid concerns over the economic numbers and a shift into bonds prompted by rising long-term interest rates.