The USA seems to be thriving at the moment, but is it a bubble? Trumps tax cuts put money into the economy, especially (almost entirely) for the middle class and rich. This is feeding a stock market surge which is probably unsustainable. People need somewhere to park the money. However, the US government is deeply in debt. One of the ways Trump is trying to reduce some of this debt is by imposing tarrifs on imports. tarrifs also serve to rebalance trade terms with countries where the USA has a deficit (which is a lot of places because the country has massively over spent). Tarriffs, however, increase the cost of living. The effect of the tax cuts is coming through. The effect of the tariffs has not hit yet. Increasing cost of living will soak up the money released by tax cuts - there is no such thing as a free lunch. It will also hit the poor and generate demand for higher wages. When this comes through the bubble will probably burst. When stocks fall they fall fast. It is impossible to say with any accuracy when this is going to happen, but early next year might be a guess worth risking. When stocks tumble it has knock on effect. Real estate values also fall. Wealth that people thought they had simply disappears. Everybody feel poorer. When people feel poorer they stop spending. When they stop spending economic activity slumps.
When America sneezes the world catches a cold. How well prepared is the rest of the world for a big slump in the world's biggest economy? The countries most closely tied to the US are likely to be hardest hit. Brexit Britain could be the worst - expect pain there. Japan, S Korea and other countries deeply enmeshed with the US economy will suffer. The wave will then run right through Asia. China and Russia are already taking some steps to unhook themselves as far as they can. The EU has made some progress in strengthening its banking and financial institutions, but not enough to completely avoid being affected. Nonetheless, there is strength in numbers and a lot will hinge upon whether the two major non-US blocks - the EU and BRICS - can hold together and act decisively or fall apart and squabble of a diminishing cake. Could be a difficult year next year.
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