The U.S. economy has been on the upswing for more than four years.
Inflation is low, corporate profits are up, and the stock market has risen beyond anyone's dreams.
But the picture may not be so rosy, warns Stephen S. Roach, chief economist of Morgan Stanley. The boost in productivity in recent years has been achieved by cost cutting, in particular, downsizing. And cost cutting does not produce real long-term gains in productivity. Rather, it leads to onetime increases in efficiency, as the surviving members of a workforce generate more output. If U.S. companies don't share the fruits of growth, Roach contends, the federal government may impose new regulations and embrace reflationary policies.