11/09/18

Another threat is a rising oil price. In September the price of Brent crude surpassed $80 per barrel for the first time since 2014, driven in part by falling Venezuelan supply and the prospect of American sanctions on Iran. It now stands at around $82.

Costly fuel used to threaten the American economy. Today, however, it spurs investment in shale rigs. That gives America a natural hedge against oil-price shocks, even though, in the short term, limited pipeline capacity might mean investment responds only slowly.

Finally, there is Mr Trump's trade war. America will eventually suffer from the distortive effects of rising tariffs, but it is not all that dependent on trade to fuel demand in the short term.

Forecasts of the effect of existing tariffs on American growth and inflation predict only a small impact. The result is that the trade war so far also looks like an asymmetric shock-certainly as far as China is concerned.

The danger is that America's outperformance pushes the dollar even higher, leading to more volatility in global finance and crimping growth in emerging markets. Yet America's boom will not last for ever. Tax cuts will no longer provide incremental stimulus after 2019.

Some forecasters fret that an end to the largesse, together with higher interest rates, may be sufficient to tip the country into recession by 2020. Analysts expect America's economy, with its ageing population, to expand by less than 2% a year in the long run.

That suggests that, unless productivity surges, a slowdown must eventually come. The question then is whether the rest of the world can withstand, let alone make up for, an eventual slowdown in America.

Not long ago, the consensus may have been that it could cope. Now there is more to worry about.