The truth of the matter is that it is being financed by ever higher borrowing, much of it from the rest of the world.For how much longer can this merry-go-round be sustained? Not much longer, seems to be the general view here, although naturally you don’t hear it from American policy makers. Were it not for the deflationary recession in parts of the rest of the world, US interest rates would already be rising steeply to choke off the inflationary effects of the boom, many believe. As it is, Alan Greenspan is risking his reputation as he works out his remaining years as chairman of the Federal Reserve by keeping an ultimately doomed boom alive. The longer it goes on, the more severe and damaging will be the fallout when it ends, it is argued.So far, however, nothing has managed to puncture the bubble.

The Russian meltdown tried its damnedest, and for a while it looked as if the near collapse of Long-Term Capital Management might deliver the goods. Even Brazil has so far failed to shake confidence on Wall Street fundamentally Stock prices have defied the doomsters. By rights, the dollar too ought to be falling by an order of magnitude to compensate for the trade deficit. However, the money to support such spending has to come from somewhere.

In so doing, they have been supporting the rest of the world. Without the US, the position in Japan, the rest of Asia and Brazil – already bad enough – would be even worse.This spending binge has been supported by a buoyant stock market, which has made Americans feel much wealthier than they perhaps really are. To achieve this, American consumers have been spending like there is no tomorrow. In a world becalmed by recession and sluggish growth, the US economy has become the only dynamo of any significance. Among the pessimistic, there is real fear.It is hard to argue against these concerns They are well founded The US has a huge and growing trade deficit. Few are prepared to defend US stock price valuations at their present levels, and many believe Wall Street has become a financial bubble comparable in size and scope to that which engulfed Japan in the late 1980s Even among the most optimistic, there is anxiety. But virtually everyone else I have talked to here this year, with few exceptions, thinks the American economy stands at an exceptionally difficult and dangerous crossroads.

Its technology leads the world, its entrepreneurs have galvanised business across the globe with their invention and energy, unemployment is at a record low and Americans as a whole are now more wealthy than ever.
However, this time round there is a quite tangible change of mood Plainly, the Americans themselves are as gung ho as ever. After seven years of uninterrupted low inflation, the US economy is still booming. IN RECENT YEARS there has been a consistent theme running like a thread through the annual meetings of the World Economic Forum. Amid the analysis of European Monetary Union, globalisation, the advance of the Internet into all areas of business and the emerging markets crisis, there has also been a growing air of American triumphalism

And with good reason. Freepages, linking up with Flextech, put on 4.5p to 32.5p, and Internet Technology gained 4p to 168p.SEAQ VOLUME: 1.1 billionSEAQ TRADES: 74,171. Others piling on the gloom were Banner Chemical, off 2.5p at 8.5p, and TGI, down 7p at 33p.Builders were helped by Bryant’s figures on Thursday and upbeat comments from Ward Persimmon rose 14p higher to 182p and Bellway 16p at 265.5p.

Ward was 3.5p higher at 31.5p.Langdons Foods, planning to raise cash through a share placing, was unchanged at 1.5p.Some Internet shares were given a further upwards whirl. Building materials group Lilleshall, forecasting a pounds 2.7m loss, gave up 20.5p to 47.5p, and talk of a “less buoyant” market left Partridge Fine Arts 11.5p off at 62.5p. Premier Farnell added a further 11p to 202p on its restructuring plans.Poor trading reports had a predictable impact Allders, with festive sales down, fell 4.5p to 108.5p. Independent Energy, the electricity and gas supplier, flared 40p to 717.5p, a peak: interim results are next week.Racal Electronic, meeting institutions next week, rose 4.5p to 387p. It is to be allowed to bid in the next licensing round and, if it desires, buy full control of Cellnet. BT firmed 3.5p to 930.5p.Mike Smith was given a muted reception as chief executive of struggling Rank leisure group; the shares fell 7.5p to 200p.WPP, the advertising group, rose 27p to 458.5p on the theory that it had been left behind in the recent media surge.Diageo’s $192m food sale produced a 35p gain to 672p.