At one point the article touts financial innovations as one of the engines of recent growth. It remains to be seen whether this is accurate. Currently financial markets are funneling tens of billions of dollars into Internet start-ups, many of which have never shown a profit. If most of these companies turn out not to be viable, then this investment will have been an enormous waste of capital. The U.S. economy went into a recession in 1990.
Deficits always increase when the economy goes into a recession.
As the economy began the recovery in 1993, the deficit began falling sharply. Measured as a share of GDP, the deficit was 0.8 percentage points lower in 1993 than in 1992. This was before any of the Clinton tax increases or spending cuts were put in place. Over the last four years, the trade deficit has increased from 1.2 percent of GDP in 1995 to 2.8 percent of GDP in 1999. If it continues to increase at this rate, the annual trade deficit would be over 5.0 percent of GDP in 2005, a level virtually unimaginable for a major industrial nation.