not a compelling argument for deferring policy action to address them. another argument for perspective is that our current account deficit reflects in part the relative attractiveness of the united states as a place for the world to invest its apparently ample present supply of savings. it is true that much of the cause of our imbalance seems to lie in optimism about future u. s. economic performance reflected in the willingness of non - americans to put their savings to work here rather than in their own countries or in europe or japan. in this sense, our external deficit may reflect relative strength, rather than weakness. this argument would be more reassuring if we were facing a lower and more sustainable current account deficit. and it would be more powerful if the capital inflows that are the counterpart of our current account imbalance were going to finance private rather than public investment, and if a larger share of those flows were private rather than official. another argument that is important to weighing the risk in running an external imbalance of this magnitude is the very large increase in the share of the world ’ s savings that now seem to move more comfortably across borders. this decline in home bias - as alan greenspan has spoken about extensively - seems to have made it easier for countries to sustain larger current account deficits than might have been possible in the past. however, we don ’ t know much about how much further room there is to run in this phenomenon. we don ’ t know much about the present degree of concentration in the exposure of private savers to the united states relative to their longer term preferences, or how stable those preference are likely to be. and, therefore, we don ’ t know how likely it is that those outside the united states are going to be willing to continue to acquire claims on the united states at the recent pace. finally, a number of observers have suggested that the present imbalances reflect what could be called a balance of interests, and that this balance is likely to endure for sometime. on one side of the balance is the substantial part of the world economy that has an interest in shadowing the dollar closely, as they absorb excess capacity, and that these governments are likely to continue to want to acquire dollars to make that exchange rate objective possible. on the other side of the balance is the united states, which is able to sustain higher rates of private spending and larger government deficits than it could if others were not willing to lend us their savings. this is an uncomfortable basis for a forecast

the matching of job seekers with job vacancies has functioned better than expected and to date this year the wage statistics show increases that, if anything, are slightly lower than expected. during the past year, however, there have been certain signs of incipient tensions between demand and supply. firms are already having difficulties in recruiting some categories of labour. shortages have not yet reached alarmingly high levels in general but each measurement is higher than the previous one. moreover, the situation is more strained in some parts of the country than in others. it also seems to be considered that those in work have increased their negotiating strength. how else is one to explain that, according to the negotiating parties, wage demands in the coming round are higher than on the previous occasion? that at least is the picture which has emerged in recent weeks. could this be a sign that the swedish economy is approaching the point at which the increase in wage costs begins to accelerate, albeit from moderate levels? if that is the case, it can be concluded that, if the present rate were to continue, the swedish economy is moving towards a situation where resource utilisation will be unduly strained. a gradual adjustment of demand to the long - term growth trend can result from a spontaneous slowdown in the economy, for instance because external demand slackens. it could also come from more subdued household demand for durable goods after the extensive purchases in recent years. another possibility is a damper on demand from a diminishing effect of the positive supply shocks that have depressed prices and thereby benefited real wages. to some extent there have been a number of signs of more subdued growth in the rest of the world, above all in the united states. moreover, new statistics suggest that swedish households are not quite as optimistic as before. somewhat weaker car sales may be an indication of more subdued demand for durables. asset prices also seem to be in a calmer phase. all of this may point to some slowdown in the development of demand. but is it enough? it is still a matter of forward indicators and we have not yet seen any clear outcome in the statistics. neither does there seem to be any notable fall - off in labour demand. the number of new job vacancies continues to be comparatively high, at least to date. in the absence of a sufficient slowdown in demand, an adjustment to the long - term growth path will need to be achieved with interest rate increases by the riksbank. it seems to me