The economy is widely expected to slow from its recent hectic pace during the next year. How much it slows and why are the unanswered questions.
The short explanation is that the consumer is the key and will ease off from recent spending because demand for housing and other goods has largely been met during the long expansion phase of this business cycle-now 79 months.
However, while most economists anticipate the economy will slow, few expect it to stall.
"Should this expansion extend beyond next September, as we forecast, it will supplant the 1980s" as the nation's longest uninterrupted span of peacetime economic progress, said Rosanne M. Cahn, chief economist at CS First Boston Corp.
At the same time, the heady days of whopping stock price gains may be drawing to a close, with the market below its summer highs. That would muffle the "wealth effect" that has helped drive consumer attitudes to such positive highs in recent years.
"The stunning stock market gains since 1994 likely were triggered by a fundamental reassessment of the inflation and earnings outlook," according to John Lipsky, chief economist at New York's Chase Manhattan Bank.
But current stock prices fully take account of this scenario, he said, and "these spectacular gains are not likely to be repeated, unless evidence emerges that productivity growth is surging. Moreover, a further correction cannot be ruled out if earnings growth is disappointing in the coming quarters."
With the stock market easing, "consumer spending growth in response to wealth gains will ease," Mr. Lipsky said in a recent, detailed forecast titled "Slow News is Good News."
Still, the economist offered a benign scenario of slowing growth through next year with moderate inflation and little or no requirement for action on interest rates by the Federal Reserve.
Ms. Cahn also cited consumers as the driving force, noting that their spending accounts for two-thirds of gross domestic product. "Luckily consumers are insatiable," she said.
Others are hedging their bets a bit more.
Roger E. Brinner, chief economist at McGraw-Hill Cos., said several major new assumptions about the nation's economy need to be tested.
They are the beliefs that interest rates will remain low and stock prices will stay exceptionally high, that price inflation has been permanently beaten, and that the business cycle itself is largely dead.
Mr. Brinner emphasized his view that low inflation today "is the result of numerous favorable supply shocks, not new behavior by workers or business." If the situation reverses itself, inflation could quickly return.
But for a strong dollar in international exchange, he said, price inflation would have accelerated last year and again this year. Instead, the rising dollar has pushed import prices down. In particular, energy price inflation has generally been low.
Mr. Brinner also cautioned that "the business cycle is not dead, just fitfully sleeping."
Much has been made of widespread corporate restructuring for greater efficiency and productivity, he said. But though corporate processes have been improved, "corporations don't start business cycles."
Instead, economic cycles-which begin with recessions-are triggered by what the economist called "the big wave makers" that can reappear at any time.
They include the Federal Reserve, which could act more forcibly if inflationary expectations change; Congress, which could "radically change" tax laws; and consumers and investors, whose attitudes could shift from manic to depressive.
And, he noted, a major international shock of some sort could occur.