Excess capacity underlies the weakness even though demand is strong. These three areas may presage a coming slowdown. Commercial bank loan growth also accelerated but consumer credit growth slowed. Credit market debt expanded at the high rate reached in the fourth quarter of 1997. The deficit on goods and services accelerated in the first quarter as the goods deficit increased while the services surplus was little changed.
Investment flows both into and out of the U.S. slowed drastically in the first quarter.
Whether this is due to Asian problems is unclear at this time. Acquisition of Treasury securities by foreigners fell precipitously, but purchases of other U.S. securities remained strong. The Pulse of Capitalism is published quarterly. Comments may be sent to Pulse Publication, P.O. Box 140, Gibsonia, PA 15044. Material may be reprinted with acknowledgement of the source.