In 1998 the volume of U.S. private spending rose by almost twice the increase in disposable income. The impact of this excess private spending financed by increased net borrowing has been profound; without it, the economy would have stagnated. Can this pattern of demand growth continue? The...

Growing government budget surpluses combined with growing trade deficits have generated record private sector deficits. Unless households continue to reduce their saving--creating an increasingly unsustainable debt burden--the impetus that has driven the expansion will evaporate.

Many papers published by the Levy Institute during the last few years have emphasized that the U.S. economy has relied too much on the growth of lending to the private sector, most particularly to the personal sector, to offset the negative effect on aggregate demand of the growing current...

The U.S. expansion has been driven to an unusual extent by falling personal saving and rising borrowing by the private sector. If this process goes into reverse, as has happened under comparable circumstances in other countries, there will be a severe recession unless there is a big relaxation...

The U.S. expansion of the past eight years has been fueled by a rise in private sector indebtedness. In 1997 U.S. private sector spending exceeded income for the first time since 1952, and since then the gap between the two has risen markedly. The situation closely mirrors that experienced in...

The latest batch of numbers from the United States makes for a disturbing read. The growth rate of GDP has been adequate, but the current account deficit was 6.3 percent of GDP in the fourth quarter of 2004, and the terrible trade figures for January and February promise an even bigger deficit...

Is it sufficiently realized how intractable those U.S. imbalances -- and how dangerous their potential consequences at home and abroadÑhave now become?

There is a strategic need, if a "growth recession" is to be avoided, for a new motor to drive the economy, particularly if there is a further decline in private expenditure relative to income that could generate a further hole in aggregate demand.