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A major reason for the long surge of growth is the information revolution, which is not only creating new jobs but also helping business managers fine-tune the ups and downs of the past. "Thanks to the technological revolution, business inventories are at a 30-year low," said Hormats. This is no mere bit of arcana, he explained: "One of the major contributors to recessions in the past has been large inventory overhangs," whereby manufacturers first produce too much, letting large backlogs of unsold goods pile up in their warehouses, and then slam on the production brakes, throwing workers onto the streets.
Computer networking also enables businesses to manage their far-flung operations more efficiently, Hormats said, offering them greater ability to adapt to changing conditions. Though it may not be good news for jobholders, the new pressures of global competition are forcing managers to keep their work forces trim, thereby avoiding, as Hormats put it, "worker overhang during good times, so that in periods of weakness you don't have a gush of new workers into the jobless pool."
Join these factors with America's open trading economy and venturesome capital markets that offer ready credit to entrepreneurs, and the result is a system that can roll with the punches as never before. A corollary, Garten argued, is that the U.S. economy can grow far faster without inflation than past experience suggests--or today's Federal Reserve Board, which controls America's money supply, believes. If anything, Garten feels, the American economy is even stronger than its current performance suggests. And if it has a weakness, it may be that currency controllers won't let it grow above last year's 2.5% annual rate. He is worried that if the economy moves ahead at a faster rate than that,"the Fed is likely to pull the trigger prematurely," needlessly raising interest rates to fight a nonexistent threat of rising prices.
Some things have not changed, however: America still has a dismal savings rate and remains a huge overseas borrower. That in turn could prove to be a vulnerability. Kenneth Courtis, chief economist and strategist for Deutsche Bank Group in Tokyo, said a surging U.S. trade deficit, thanks to the mighty dollar, could ultimately spark a stampede of foreign investors from the American bond market, which would send interest rates soaring and the economy tumbling. "Those contradictions could blow up at any time," Courtis said. "If you're talking about the stability of the international economy with the U.S. at its core, the yellow light is already flashing very strongly."
Despite the current American success, there was no agreement among the panelists that the new U.S. economy--especially its easy-hire, easy-fire labor laws and low-cost but flimsy social safety net--will quickly be copied elsewhere. "In many countries there is a political and social drive not to accept the U.S. model in an unvarnished way," Garten said. In fact, said Albert Bressand, head of Promethee, a Paris think tank, the U.S. mantra of flexibility becomes the unspeakable F word in much of Europe: "Politically, it is now a term you cannot use. You have to dissociate yourself from it."