In truth, each of these risk factors does have a positive side. An optimist could argue that the market is simply coming back to reality after its high-tech binge. And retail sales may not be growing as fast as last year, but their growth is still significantly above long-term averages. The dollar does appear to be unusually strong, but, if it weakens, exports would become more competitive, improving the balance of trade and keeping unemployment down. The sole remaining cloud is corporate debt.
Capitalist economies have a long history of overinvestment in hot new technologies.
In the 1880's, more miles of railroad track were laid than in any other decade of American history. In the 1890's, the resulting excess capacity led to more miles of track in bankruptcy than in any other decade in American history. In the 1990's, we have seen huge investments in information technology, with much of the infrastructure investment being debt-financed. We are already seeing signs of excess capacity in long-haul fiber optics. The United States economy has performed extraordinarily well the last nine years, and the most plausible forecast is for continued growth, albeit at a slower pace.