Weaker dollar is key to sustaining boom

AT first glance you might think that the American economy is booming.

Increased market confidence has seen the Dow rally to its highest level in a year, American manufacturing output has increased, and the dollar has strengthened.

But it's not as simple as that. The US did record growth in the second quarter, but its GDP actually only grew by 0.8% in that period. Without generous defence spending, tax rebates, and an arguably unnecessary interest rate cut, the US might not have grown at all.