Economists say that the title of Jack Nicholson’s hit movie As Good as it Gets, aptly describes the current state of the U.S. economy. In spite of being the best performing economy in the world, the question continues to be “How Long Will It L

Economists say that the title of Jack Nicholson’s hit movie As Good as it Gets, aptly describes the current state of the U.S. economy. In spite of being the best performing economy in the world, the question continues to be “How Long Will It Last?”

Experts from federal government and private think tanks concur that the seven-year-long expansion will continue but much more moderately. For next year, of the economists polled, 55% predict a baseline forecast of slower but continued growth; 25% predict a cyclical downturn and 20% predict higher growth than 1998. Why the pessimism? Output is close to capacity and the Federal Reserve should raise interest rates, resulting in a decline in residential construction, expensive household durable goods and automobile production.

Capital spending will continue to expand, driven by high utilization rates that justify expansion. Rapid advances in technology and businesses’ greater acceptance of such changes also will spur spending. Gross investment in schools, prisons, roads, and water treatment and delivery systems is projected to increase by 4%, but employee raises in public service should only be about 1.5%–slightly higher than business spending. Investment in new structures should level off later in 1998 with spending for telecommunications facilities parking structures increasing and offices, industrial plants, new stores and hotels beginning to decline. Construction firms should see employment increase into 1999 with gradual cutbacks as large domestic corporate and government projects near completion. Regionally, growth with be strongest in the Mountain and Pacific Northwest regions and slowest in the Mid Atlantic due to tight labor markets’ pressure on wages and benefits.

Can we anticipate the opportunities in future years? In Shifting Gears: Thriving in the New Economy, author Nuala Beck makes some astute observations regarding trends affecting the U.S. economy

  • The U.S. health and medical industry has become larger than oil refining, aircraft, autos, auto parts, logging and shipbuilding combined and will employ one in ten Americans by the year 2000.

  • Housing starts, a traditional measure of economic health, now only represents 4% of the U.S. economy. Not that it no longer matters, other industries just matter more.

  • The telecommunications industry and the companies that provide cellphones and data communications for the burgeoning information highway have outpaced all the combined suppliers of the automotive industries as the most significant influencer of U.S. economic health.

  • The software industry, barely a dot on the economic map of the ’80s, has grown to become more than $46 billion annually.

  • More Americans work in accounting firms than in the whole energy industry. Number crunchers employ more people than the entire mining industry.