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The Big Picture

The Icarus Economy

Low unemployment, on-target inflation, and steady growth in the United States could lull policymakers into thinking that they are living in the best of all possible worlds. But only Dr. Pangloss could ignore the storm clouds on the horizon.

In this Big PictureMartin Feldstein predicts that the inevitable rise in long-term interest rates will bring an end to the current stock-market boom. And Jeffrey Frankel points to other potential shocks – both at home and abroad – that could turn the current recovery into a painfully deep recession.

Taking a broader view, Kenneth Rogoff notes that while the Trump administration's stimulus policies are working for now, its assault on institutions could diminish the economy's long-term prospects. Likewise, Benjamin J. Cohen warns that Trump's behavior in office is threatening the dollar’s global hegemony and the many benefits that it confers on the US. And Daniel Blitz and Robert Dugger worry that policymakers are in denial about the country's future fiscal liabilities.

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