It's not that no one worries about the potentially disastrous results of unchecked financial exuberance — least of all Greenspan, who has been raising interest rates steadily to prevent things from overheating. And, in fact, the modest increases of one half or one quarter percent are a constant reminder that an eventual downturn is not only a possibility but a certainty. "Everything that I've read suggests the economy will cool off this year," says TIME economics writer Frank Gibney.
That view is widespread. In their analyses of the country's economic health, economists consistently point to one aspect of the boom that's making them nervous: Consumers, buoyed by the unprecedented good times, are heading out to shop with a vengeance, at the expense, analysts say, of their savings accounts. Counterintuitive as it may seem, people tend to spend feverishly during economic upswings, entertaining thoughts of saving only when the well runs dry (which, of course, strangles fuel to an already spluttering engine). Thus is removed the cushion that could have prevented a plummeting economy from suffering a dead-cat bounce. Gibney is a little more optimistic, and points to a softer landing. "The underlying strength of this economy makes it difficult to see how there could be a major crash, or any other extreme downturn," he says.
With an eye on keeping the blistering economy as stable as possible, Greenspan et al. meet this week to discuss another rate hike. Analysts predict another incremental raise, to 5.75 percent. Let's hope it works, otherwise there'll be plenty of gadgets stuffed in people's closets, and precious little safely nesting in the bank.