After more than five years of uninterrupted growth, analysts have taken to calling it the "Goldilocks economy"--an American expansion that is not too fast and not too slow but just right. Now, they are saying, Goldilocks may have gone global. And they can point to evidence everywhere:
--In Asia, battered Japan is back from the brink of disaster. After little growth in 1995, it last year recorded 3% growth, the fastest among the big industrial economies. Meanwhile, China, its expansion having run amuck two years ago, has managed to pull off a "soft landing" by cutting back inflation without a recession.
--Only a year ago, Latin America was still reeling from the effects of the 1994 Mexican-peso collapse. Now virtually all its major economies are riding a wave of free-market bullishness.
--In Europe, growth is perking up despite high unemployment, and there's renewed confidence that its plans to form a monetary union around the single-currency euro will be implemented on schedule in 1999.
--With Wall Street leading most of the world's stock markets outside Japan to record highs, the dollar vaulting higher, and foreign investment continuing to pour in, the U.S. is continuing to enjoy its second longest peacetime recovery. And there appears to be no end in sight.
So where's the recession? Traditional economic theory holds that every business upturn ends in a downward slide of sagging sales, declining profits and disappearing jobs. But when TIME brought together five internationally renowned experts during the World Economic Forum Meeting in Davos, Switzerland, an intriguing question floated through the clear Alpine air: Has the U.S. economy--the world's largest and most influential--banished the business cycle? Has the combination of high technology, globalized markets and unprecedented labor flexibility created a new paradigm of continual growth that can serve as a model for the rest of the planet?
The answer from TIME's experts was both yes and no. "The post-1982 American economy is significantly different from the pre-1982 one," said Robert Hormats, vice chairman of Goldman Sachs International. Since the bottom of the brutal 1982 recession, there have been but seven months of downturn. Previously, growth was interrupted on average every four years by long and deep recessions. Argued Hormats: "The business cycle hasn't been repealed, but volatility has been greatly reduced."
Does the swell of growth spreading around the world mean that the American model is contagious? TIME's experts wouldn't go that far. Although generally optimistic about the short term, most of the panel members also cautioned that the current good news could still contain the seeds of its own abrupt end.
"There's more fragility in the system than is generally recognized," warned Jeffrey Garten, dean of the Yale School of Management. "We are in a very precarious position because investors' confidence is disconnected from any hard-hitting analysis of what is underlying the economy. Even a small increase in interest rates could puncture the balloon."