US Economy is hot.

[Opti]

the year 2004 is a VERY special year. This year companies have tax incentives to BUY new machinery, equipment and take advantage of accelerated depreciation.
Plus...they can do it by borrowing VERY cheap money, the LOWEST interst rates in USA in the last 50 years.

In around 1990 the Australian governent made a similar major change to tax laws that resulted in a rush for businesses to make captial equipment purchases in that tax year.... if that was any indication of how farmers must be rushing to get plant orders in over there right now... it will have a big effect next year... and maybe longer.

Have you read Soros' "Alchemy of Finance"? My instinct is that the relationship should be reflexive with both driving each other - probably too far sometimes. ;-)

I havent... but I do agree they drive each other.. I guess even if it could be shown sentiment preceeds change.. it could simply be that sentiment is the part that governments can effect.. so they do.


I wasn't suggesting I expected a recession btw.. just volatility... like Serge, and probably most people, I dont expect %4+ growth figures to last but I dont see any obvious reason to expect a recession ( 3 consectutive periods of negative growth... I think is the accepted definition of recession)