The international community's response to the Asian financial crisis

The U.S. economy just completed another stellar year, marked by strong growth and declining inflation. Indeed, the low inflation of recent years has been instrumental in reinvigorating the U.S. economy, helping unleash a new vibrancy and confidence across the country. However, the shock wave working its way toward us from the Western Pacific will likely be a countervailing force in our economy.> > Financial turmoil in a handful of Asian countries should slow the growth of spending by foreigners on U.S. goods and services. On balance, most economists are currently guessing that reduced demand for our exports will trim perhaps a half percentage point off our overall growth rate over the next year. Of course, the degree of uncertainty surrounding this estimate is large. The actual slowdown will depend on how developments in Asia play out including the policy response there and abroad.> > In a speech given at the University of Wyoming, Mr. Hoenig cautioned that even those of us in the Tenth District are not immune from events in Asia. Many local industries such as agriculture, technology, and manufacturing are world-class competitors and will be affected by these events. Allowing the Asian crisis to go unchecked would surely have had an increasingly harmful effect on the economies of our district.