I heard the rumble of the equipment, and I knew this industry was for me. The Asian economic crisis, and the related influx of steel imports in particular, has highlighted the danger of one-way trade that goes only to the U.S., Chimerine said. A major challenge that the economy will face during the next couple of years is price deflation, said Ed Yardeni, chief economist and managing director of Deutsche Bank Securities North America. The steel industry has seen prices for its products fall during the past year. That causes problems for everyone else.
Some economists contend that the U.S.'s large trade deficits are a signal of a prosperous economy.
But trade deficits can camouflage their own bad effects, Chimerine says. In addition to deflation, two other factors could cause short-term drags on the economy, Yardeni says. Those are the year 2000 computer bug and irrational exuberance that has pushed the stock market too high. The Dow Jones Industrial Average will plunge to 7,000 by late 1999 or early 2000 after reaching an 11,000-point high in the spring, Yardeni predicted. It will reach that level by 2005.