In addition, strong productivity within US industry has contributed to improved profit margins. However, the upturn in the USA is expected to be fairly modest, which is mainly because households are expected to increase their low level of savings. (Diagram 1 - savings in the USA). There is a large  2  BIS Review 37/2002  savings imbalance in the US economy. Sooner or later an adjustment is expected. The weakening of the dollar that we have seen recently may be an indication that the adjustment process has begun. The deficit on the current account amounted to 3.9 per cent last year. On top of this, households’ wealth in the form of shares is expected to continue to develop weakly and the rapid price increases on property are expected to subside. The US labour market does not appear likely to improve before the end of the year, which will give a subdued development in real wages. (Diagram 2 - unemployment in the USA, the euro area, Germany and France). At the same time, there is a risk that imbalances in savings in the USA will be adjusted more rapidly and more forcefully with the result that the US economy may lose speed. If the American household sector were to increase its savings and thereby reduce the debt burden more rapidly than is currently predicted, it could lead to a poorer development in consumption than expected and a stagnating economy.
The decline in the average working hours over the past year is partly due to the economic downturn, as overtime has fallen. However, there also appear to be structural factors, such as a rising level of absence due to sickness and central agreements on shorter working hours, behind the decline. This indicates that the reduction in the labour supply could be at least partly of a more lasting nature. The decline in productivity during 2001 was limited in comparison with the declines in 1977, 1980 and 1990. Greater openness towards the world around us, a higher level of education during the 1990s and certain improvements in competitive pressure indicate that productivity will continue to be higher than in the 1970s and 1980s. However, this also presupposes that productivity in the information and telecommunications sector will return to a good level. There are also other risks: Inflation rose more than expected last spring, which was only partly due to price increases of a more temporary nature. The rest was primarily due to wage developments in the services industries. When employment begins to rise once again, while the labour market is strained, there is a risk that the new central wage agreements signed over the coming years will be affected by the fact that others have previously received high wage increases. To summarise: low inflation and consolidated central government finances have meant that there was room for manoeuvre to meet the economic downturn.