The Long Boom: Not a Cure
Americans who consider themselves immune from giddy optimism or blind faith are having the strangest thought these days: They believe, devoutly, in the Long Boom, the Conquest of the Business Cycle, the Triumph Over Inflation, the Dawn of a New Era.</br></br>You need all those capital letters to capture what a big deal this new faith isÛÓand how it could transform almost everything else weÛªre debating.</br></br>You know something special is happening when Alan Greenspan, the chairman of the Federal Reserve Board and the Boom FaithÛªs Doubting Thomas, starts sounding like a qualified optimist.</br></br>Last December, it took only two words from Greenspan, ÛÏirrational exuberance," to bring the stock market crashing down, albeit temporarily. This week, in testimony before a congressional committee, GreenspanÛÓ whom many in the financial markets believe to be infallibleÛÓstill declined to embrace the new faith. But he did something impor- ÐÊÐÊ His careful words will be parsed with - great care by financial theologians: ÛÏWe do not now know, nor do I suspect can anyone know, whether current developments are part of a once-or-twice-in-a-century phenomenon that will carry productivity trends nationally and globally to a new higher track, or whether we are merely observing some unusual variations within the context of an otherwise generally conventional business cycle expansion."</br></br>But is the key word here ÛÏunusualÛ or ÛÏconventionalÛ? LetÛªs start by giving the new faith its due: The last big recession took place 15 years ago. We haven't had sustained growth with almost no inflation since the 1960s. Older American industries have become more productive. The United States leads in the new high-tech and communications sectors. Consumer confidence is going up. And thereÛªs that stock market.