What are the biggest risks in the United States?

The return to full employment in the United States will at best bring growth back to the level of potential growth (around 2% per year). The risk is obviously that a mechanism might appear which would push US growth well below potential growth. But where could this mechanism come from, where is this risk when: Fiscal policy is very expansionary ? Household debt has declined significantly ? and Corporate profitability is very high? We believe that the two most serious risks for the US economy are: A substantial decline in equity markets, which could be triggered by a growth downturn, or by investors returning to equity markets that are far less expensive than the US market, because the US economy is very sensitive to equity values; An end to capital inflows into the United States if it no longer attract s international capital; the end of this process would make it very hard for the United States to finance the "twin deficits" (the fiscal and external deficits ), leading to a steepening of the yield curve and a decline in the dollar exchange rate.