Eamonn Fingleton explains how that deficit reflects a hollowing out of American manufacturing. For now, a strong dollar gives us low inflation, despite our heavy dependence on imports. But if the trade deficit persists, foreigners could lose confidence in the dollar, and the bill could suddenly come due. And both households and businesses are now more heavily dependent on borrowing than at any time during the postwar era. A recession could also be more problematic than in the past because the economy today has fewer shock absorbers.
Unemployment insurance covers relatively fewer workers and for shorter periods.
Welfare, as an entitlement, is gone. Even the cut in military spending, relative to Cold War peaks, means one less source of reliable stimulus from government. Other structural vulnerabilities include the fact that the boom, despite its record length, has still not significantly lifted incomes for most Americans. Savings rates are at an all-time low because ordinary people spend every nickel in order to sustain consumption patterns. Because of trade and the relative weakness of unions, even a full-employment economy has not done much for worker bargaining power.