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Friday, 5 January, 2001, 16:15 GMT
Signs of a slowdown
It is hard to say exactly when the first warning signs of the end of the US boom emerged.
There were a few early alarm calls, but by the time Alan Greenspan told the US Congress in July he had seen signs of economic slowdown, the business of anticipating the recession had picked up.
The talk shifted from whether the US had seen the last of the interest rate rises, aimed at combating inflationary pressures, to when and if interest rates would fall.
Now that rates have been cut, the question is has the horse already bolted or has Greenspan read the signals right and acted just in time to save the economy from recession.
Farewell to the good times
"We've had a good run, enjoy it while it lasts because you cannot always expect it to be as good as it's been," Sir Eddie George, governor of the Bank of England, said philosophically of the US boom late last year.
Such philosophy may seem out of place if the worst fears are realised.
A slump - as defined by the Oxford English Dictionary - is a sharp or sudden decline in trade or business, usually accompanied by widespread unemployment.
A recession meanwhile, is defined by economits as two consecutive quarters of negative economic growth.
In popular historical memory, the Wall Street crash in 1929 and the depression that followed encapsulate many people's worst fears about recession.
When the stock market crashed in October that year, it triggered a depression, which saw millions of people thrown out of work, many of whom lost their homes.
The first real warning that the longest boom in US history was about to end came when shares fell out of bed in March.
Typically, stock market indexes reflect the expectations of growth, not just of specific companies or sectors, but of the economy as a whole.
In the US, this is even more true as so many people own shares that a sell-off can act as a forewarning of falling consumer confidence.
Shares had been heavily bought in anticipation of future profits of high-tech companies - despite the lack of existing profits - but were then sold off as investors questioned when and indeed, if, these profits would ever be realised.
Over the year, the Nasdaq was down 39%, its worst performance for 29 years.
As many Americans have had their incomes articificially boosted by "paper gains" on Wall Street, share price falls could encourage them to stop spending and start saving.
Tight rein on spending
Already, some evidence that consumers are reluctant to part with their cash has emerged.
Consumer confidence in the US tumbled in December to its lowest level for more than a year.
The average American's personal income fell for the first time since 1998 in October, with consumer spending rising by the smallest amount in six months.
Previously, the desire for fresh consumer goods was such that the US was importing far more than it is exporting, as consumers flocked to buy foreign goods.
A new reluctance to spend money has been one of the factors that has led a series of high-profile technology companies, such as Apple and Microsoft, to issue profit warnings.
Even Wal-Mart, the world's largest retailer, says sales to be lower than expected.
One possible effect of these profit warnings is that more jobs could be lost.
Up until early last year, the US economy was creating millions of jobs and the unemployment rate was falling.
Then in February, the economy surprised analysts when it created a paltry 43,000 jobs - compared to gains of about 300,000 a month - but it picked up again in April, with unemployment rates at their lowest levels since 1970.
Since then, employers appeared to be less keen to take on staff.
Some dot.com start-ups spluttered to a halt, while a few more traditional companies cut back on staff.
In December, US companies announced 133,713 layoffs, a 203% increase, according to job search firm Challenger, Gray and Christmas.
The first clear sign that growth was slowing came at the end of last year.
The US economy grew at its slowest rate for four years, revised figures for the third quarter show.
The Commerce Department revised its estimate of growth of GDP in the third quarter to 2.2%, from a previously reported 2.4%.
This compares with a growth rate of 5.6% in the second quarter and provided one of the strongest indications to date that the boom is coming to an end.
Early in the New Year, the National Association of Purchasing Management ( NAPM) published a key index showing that manufacturing confidence in December had plunged to a ten-year low.
It was this figure that is thought to have prompted the Federal Reserve make its dramatic intervention in cut interest rates by 0.5% to 6%.
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