"Housing, obviously, remains a critical point of concern," he says. "New housing starts have already dropped by more than 18 percent so far this year. And delinquency rates and defaults, already up, especially in the subprime area, are expected to continue at their relatively elevated levels."

But businesses have the wherewithal to again finance an expansion in capital spending easily--given the huge amount of cash on corporate balance sheets--without borrowing.

Similarly, the dollar's cumulative weakness on foreign exchange markets should benefit the economy by promoting at least a marginal pickup in exports. The effect is already becoming evident.

"Against a background of continued economic growth, the Fed will begin to raise short-term interest rates again," he predicts. "But the absence of any significant inflationary pressure should contain any general rise in bond yields."

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Spouses Gail Liberman and Alan Lavine are syndicated columnists. You can purchase Alan Lavine & Gail Liberman's latest book Quick Steps to Financial Stability (QUE Publishing 2006) online at www.moneycouple.com or at your local bookstore. E-mail them at MWliblav@aol.com.