The further appreciation of the dollar over 1997, even predating the effects of the Asian turmoil, suggests a continued drag from net exports over 1998, another factor suggesting some slowing in the expansion going forward. The mix of output in the fourth quarter may also provide an impetus for a slowdown in production going forward.
GDP growth appears likely to have exceeded 3% again in the fourth quarter. The production side data -- employment, hours worked, and industrial production -- certainly seem to point to solid growth, but the available data on demand components BIS Review 3/1998  -6-  have been on the weak side. This tension could be reconciled by an increase in inventory investment.