New Left Review 25, January-February 2004

ROBERT BRENNER

NEW BOOM OR NEW BUBBLE?

The Trajectory of the US Economy

In early 2002 Alan Greenspan declared that the American recession which had begun a year earlier was at an end. By the fall the Fed was obliged to backtrack, admitting that the economy was still in difficulties and deflation a threat. In June 2003 Greenspan was still conceding that ‘the economy has yet to exhibit sustainable growth’. Since then Wall Street economists have been proclaiming, with ever fewer qualifications, that after various interruptions attributable to ‘external shocks’—9/11, corporate scandals and the attack on Iraq—the economy is finally accelerating. Pointing to the reality of faster growth of gdp in the second half of 2003, and a significant increase in profits, they assure us that a new boom has arrived. The question that therefore imposes itself, with a Presidential election less than a year away, is the real condition of the us economy. [1] I wish to thank Aaron Brenner and Tom Mertes for much help on both content and style. I am also grateful to Andrew Glyn for data on inventories for Germany and Japan and Dean Baker for very useful advice on data sources. What triggered the slowdown that took place? What is driving the current economic acceleration, and is it sustainable? Has the economy finally broken beyond the long downturn, which has brought ever worse global performance decade by decade since 1973? What is the outlook going forward?

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