Export growth has helped to compensate for weakness in domestic consumption and anemic real estate markets. The outlook for exports remains favorable. In the early Eighties when the dollar was king, domestic manufacturers had to dramatically improve productivity to compete with imports. Now, as they face slower domestic growth, these manufacturers benefit from better product quality and production efficiencies, as we as more favorable exchange rates. They can compete more effectively in foreign markets and against foreign imports domestically.
Debt remains the dark cloud over the economy.
Although growth in consumer and corporate debt is declining, the Federal Budget deficit is increasing, partly because a slower economy has generated less tax revenue. A second major contributor to the deficit is the savings and loan mess. The health of state and local governments is also ailing. One after another has lapsed from surplus into deficit. Our intent is not to depress you, nor to write an obituary for the U.S. economy.