THE BEST OF TIMES

THE BEST OF TIMES

merica enters the new millennium with high hopes bordering on jubilation.

U.S. consumer confidence soared in December to 141.4, its second-highest reading ever, the Conference Board reported. Since consumer buying accounts for roughly two-thirds of U.S. economic activity, this rise in confidence points to stronger retail buying and continued economic growth in the months ahead.These are clearly good times, maybe the best of times. Job prospects are bright, wages are rising and inflation is under control. Who could ask for anything more?

Still, one has to wonder: Are Americans enjoying the last days of the bubble economy, or the first days of a new era of peace and prosperity? The answer, unfortunately, will not be known for years to come.

We would prefer to believe that U.S. workers, highly educated and armed with the latest technology, have become so productive that the good times will continue to roll along indefinitely. Perhaps we are riding an endless wave as we surf the Internet to an ever-more-efficient future.

Clearly, however, several trends in the economy are not sustainable, particularly the widening trade and current account deficits, which must be financed by foreign investors.

As the Securities Industry Association pointed out, 1999 was the first year in a quarter-century that foreigners were net sellers of U.S. Treasury securities. This raises questions about the wisdom of relying too much on the kindness of strangers. Foreign investors own almost $1.3 trillion in U.S. government securities, or 40 percent of the country's accumulated marketable debt, up from 20 percent just five years ago.

Come what may, the current account deficit must be financed. Any decline in the value of the dollar could mean that U.S. interest rates will have to rise to attract and keep foreign investors.

In light of the huge trade and current account deficits, progress in improving U.S. exporters' access to foreign markets is extremely important. The failure of the World Trade Organization at its ministerial meeting in Seattle to come up with a negotiating agenda for a new round of multilateral trade negotiations demonstrates that the consensus on reducing barriers to trade has broken down.

Rebuilding the consensus on trade issues in the United States should be New Year's resolution No. 1 for policy-makers. Trade has become the focus of the new Luddites, who would like to smash the forces of globalization, including trade and growth itself.

It is only natural that people should fear change, no matter how beneficial that change may be. As early in the era of machinery as 1811, the manufacturing counties of England were the scene of rioting that almost assumed the dimensions of civil war. Its object was the destruction of all mechanical substitutes for hand labor.

''This popular frenzy ran its course in a few years, but it has broken out at intervals on both sides of the Atlantic, under more enlightened conditions. Yet, with all the temporary displacement of skilled labor which has resulted from successive improvements in machinery, the demand for skilled labor has constantly increased,'' The Journal of Commerce noted in an editorial on Jan. 2, 1900.

Adjusting to the forces of globalization and technological change will not be easy, but free and open markets offer the only real hope for the planet to increase standards of living.

Technology has not only helped expand markets, it has changed the way business is conducted. The number of online securities trading firms has risen from zero to nearly 200 in the last four years.

Stock volume, market performance, new capital raising, and merger and acquisition activity are all setting annual records as Wall Street's longest bull market accompanies the United States' longest economic expansion.

The securities industry raised more capital for business in the United States during the 1990s than the combined total raised in all previous years in U.S. history. The industry raised $2.570 trillion in 1999 and $14.5 trillion in the entire decade.

Over the 1990s, the Dow Jones industrial average more than quadrupled, while the Nasdaq composite increased more than eightfold.

No wonder Americans are feeling pretty good about their economic prospects. We should remember, however, that it wasn't long ago that Asia seemed to be falling apart and rocking the rest of the global economy. The reasons for the crisis remain poorly understood. The recovery in South Korea's economy to growth of at least 9 percent this year has been impressive, but it may not be sustainable without continued corporate and financial sector reforms, the International Monetary Fund said last week.

Meanwhile, the three interest-rate increases put in place by the Federal Reserve in 1999 have done little to dampen U.S. consumer enthusiasm. Analysts worry that overly robust spending will force the Fed to raise interest rates again to prevent demand-driven inflation.

There are enough storm clouds on the horizon that there is little room for complacency as we celebrate our good fortune and welcome 2000.