The New Business Cycle

Six years into the economic expansion of the 1990s, and the living is easy. Almost 3 million jobs have been added over the past year alone, and consumer confidence is soaring. Company coffers are brimming with profits, the stock market is in the stratosphere, and inflation is actually falling.

Perhaps best of all, to many it seems the good times can go on for years. That old bugaboo of capitalism--the business cycle--has been tamed, according to today's conventional view. Rather than experiencing the booms and busts of old, the economy is on a steady growth path. Companies are avoiding past excesses, using computers and improved communications to manage inventories better and to boost workers' productivity. "Information technology has doubtless enhanced the stability of business operations," said Federal Reserve Chairman Alan Greenspan in his Feb. 26 testimony before Congress. His biggest worry? An overheated stock market.