Given the volatility in today's markets it is very clear that investors are anticipating some clear change in the economy either for better or worse, but are highly uncertain what that change might be. This is our conclusion. As we look to the future, we believe that the way things are is the way they are likely to be for the next year or two. We live, and will continue to live, in a period of economic flux, as a number of major economic currents cross each other and seek resolution. Among these currents are the continued move towards globalization, the weighty and growing cost of financing past and present excesses in consumer and government spending, and the redefinition of the economy from industrial to informational and technological.
Globalization is an inevitable, evolutionary force that is redefining the economic landscape.
In its wake, it is opening vast new markets to American companies, and facilitating trade with existing foreign markets. It is also attracting new competitors. While the overall impact is positive, the specific impact can be quite adverse. For the consumer, globalization means more selection, more competition, and therefore, better pricing. This is one of the key reasons for our restrained inflation outlook.