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Working Paper 2002-026A

"Cracks in the Facade: American Economic and Financial Structures After the Boom"
by William R. Emmons, and Frank A. Schmid

The United States experienced a historic boom during the late 1990s and briefly into the new millennium, highlighted by rapid economic and productivity growth, surging corporate profitability, sustained business investment in many areas, including high technology and telecommunications, and a soaring stock market. Many observers concluded that a "new era" had arrived. Meanwhile, the prestige of the Federal Reserve rose along with faith in the U.S. economy and its stock market. Deflation of the great boom brings with it many unanswered questions. Was there ever really a "new era" in the U.S. economy and stock market? Will the future be more like the boom years or the lackluster decades that preceded it? How important were the uniquely American economic and financial structures so admired around the world while the boom lasted? Can the Federal Reserve's prestige survive the collapse? This chapter explores cracks in the façade of the great American boom of the late 1990s.

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