BUSINESSWEEK ONLINE : NOVEMBER 27, 2000 ISSUE
COVER STORY Turbulence Ahead As growth slows, the odds of an economic or financial crisis requiring decisive government action go up. Here are some potential problems ahead that the new President and Congress might face: UNEXPECTED FALL IN THE BUDGET SURPLUS A slowdown will hold down tax revenues, giving the Congress and the President a politically difficult choice between cutting spending to match revenues, or cutting taxes to stimulate the economy. PLUNGING DOLLAR With the U.S. trade deficit at record levels, a slowdown could lead foreign investors to abandon the dollar. Such a plunge could force the Fed to raise rates, leaving it to fiscal policy to stimulate the economy. A FRAGILE STOCK MARKET A sharp fall in asset prices would pull down consumer spending and business investment. Interest rates would help counter a slowdown. But there might be a need for Congress and the Administration to boost spending. WAR IN THE MIDDLE EAST Conflict between Israel and Arab nations could drive oil prices still higher. Ending such hostilities could require active U.S. leadership, money, and troops for an international peace- keeping force. GLOBAL ECONOMIC TURMOIL The Asian countries are still financially fragile. A slowdown in the U.S. could send them tumbling back into recession again, requiring another round of international support. CORPORATE DEBT Corporate borrowing has far exceeded the pace of economic growth, leaving businesses vulnerable to a slowdown. A unexpected wave of big bankruptcies would lead to a call for government action. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS The Economy: Passing a Dimmer Torch COVER IMAGE: The New President's Economy CHART: Growth Slows...As Tech Demand Weakens...Manufacturing Dips... CHART: ...The Stock Market Declines...The Trade Gap Explodes...And Corporate Debt Surges TABLE: Turbulence Ahead The Alan Greenspan of OPEC? CHART: Fill 'Er Up Can the Market Regain Its Balance? CHART: Scaling Back Expectations CHART: Losing the Investor Vote TABLE: The View from Four Wall Street Gurus Commentary: The Pitfalls of One Person, One Vote TABLE: Where the Votes Are TABLE: No Electoral College Sleight of Hand at the Polls TABLE: Tricks of the Trade Is There Any Help for the ``Hanging Chad''? Commentary: The Young and the (Still) Listless INTERACT E-Mail to Business Week Online

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