In the United States and the euro zone, the attempt to overextend the expansion will worsen the correction

In the United States, the Trump administration is conducting and will continue to conduct a highly expansionary fiscal policy , while the Federal Reserve is normalising its monetary policy only slowly. As t he United States is very close to full employment , t h e result will be a significant deterioration in US foreign trade and probably a depreciation of the dollar, which will weaken the US economy at a time when it is beginning to slow , due to the resulting fall in real incomes (we know that in contemporary economies, the dominant effect of exchange rate depreciation is to weaken domestic demand as a result of the deterioration in the terms of trade). In the euro zone outside Germany, fiscal policy is now becoming slightly more expansionary, but, above all, interest rates are zero or near zero, which means that monetary policy will have no room for manoeuvre when activity slows. It can therefore be said that in the United States and the euro zone, economic policymakers ’ desire to prolong the expansion period will result in a more severe recession, as economic policy has already used its available leeway to stimulate the economy.