All Hail 'Delinkage'!(European economy not linked to United States)(Brief Article)(Statistical Data Included)

What a contrast! In 2000, the new economy was to end the business cycle. High growth, employment gains, low inflation forever seemed to be the promise. One quarter into the new year, the New Economy is on its way into the abyss, as they say. Stocks are melting away. Dismissals abound. Confidence--yes, boasting--has given way to fear. What happened?

Basically, nothing fundamental. An oil and gas hike hurt. The dollar rose against the euro about 25 percent. The Fed raised interest rates some 2 percentage points--hardly enough to kill a boom. Meanwhile, employment is still rising. U.S. economic authorities have time and leeway to act. Tax cuts are coming. So I do not share the panic. If the airship U.S. Economy has lost altitude, it has not sunk as much as pessimists claim--and, indeed, seems poised to gain height during the second half of 2001. That's good news for America. It's even better news for Europe.

Once upon a time, the conventional economic wisdom could be summarized: when America catches the flu, Europe comes down with pneumonia. No more. Europe will escape an American "contagion," modest as it may be. Yes, we're feeling the U.S. slowdown. We've cut estimates of Europewide growth from 3.4 to 2.5 percent. But for a variety of reasons-- signifying a fundamental change in transatlantic economic relations-- Europe has over the decades increasingly "delinked" itself from dependency on America. Big corporate tax cuts across Europe, most especially in Germany, will be worth three quarters of a percent of GDP growth this year. Compared with America, European ...