Watch out for the correction ahead

After an extraordinary end to 1999 - which saw economic expansion rates near 7% - and a strong start to the new year, expectations for growth this year are rising strongly. They are leaving the 3%+ consensus forecast which was prevalent last year, far behind. The first half could see activity rise by 5%, the second by over 4%, unless further action is taken. Why this is a concern is that the sustainable non-inflationary growth rate is probably around 3.5%. A prudent Fed therefore needs to take action to slow things down. The problem is that rates are higher and many areas of the market are...