In a world of economic woes, the stellar performance of the U.S. economy is a mystery. On the one hand, we have virtually full employment, low inflation, low interest rates, and seemingly endless prosperity. Yet, when you look around the world, America represents the vast majority of this planet's productivity. Most of the rest of the world is in recession, with little sign of recovery. To have little or no effect on our economy is impossible, yet here we are.
Economic theory teaches that gaps tend to fill in quickly.
If that is still true, then the gap between imports and exports will narrow. Since we probably can't sell our goods to countries with flagging economies, that means we will reduce our imports, hopefully not through a sharp economic downturn here, but we'll see. Anyone who has money in the stock market today has to be astounded by its remarkable performance. The market seems to defy all reason, especially in the case of Internet stocks. It seems that the more money an Internet company loses the higher its stock soars.