Polls show overwhelming numbers of Americans believe the U.S. economy is in a recession, although government statistics have yet to show a period of negative growth that meets the technical definition. What is known is that the American economy has slowed dramatically, and that the U.S. housing and credit markets are in turmoil while the dollar plummets and inflationary pressures are on the rise. VOA's Michael Bowman reports from Washington that there is little consensus among top economists about how bad the situation is.
Recent months have seen a torrent of troubling economic news, and last week was no exception. The continuing sub-prime mortgage crisis pushed one of America's largest investment banks to the brink of insolvency, saved only by a government-facilitated buyout.
U.S. industrial production continued to decline, while oil prices remained above $100 a barrel. The U.S. central bank twice cut interest rates to ease credit and spur economic growth, but even those measures seemed to reinforce the view that the U.S. economy is faltering.
"I think it is very likely we are in a recession right now. I think it is a certainty that we are in something that is going to feel like a recession to most people," said Lawrence Summers, who served as Treasury Secretary during the Clinton administration. "I hope that it will be easily contained and we will see a return to expansion. I do not think, after all that has happened in the financial markets, we can be certain that that is the case."
Summers was speaking on the Fox News Sunday television program. Also appearing on Fox was Glenn Hubbard, a former head of President Bush's Council of Economic Advisors. Hubbard says current conditions are grim, but he believes America's economic slowdown will be brief.
"We have clearly downshifted in the past year from GDP growing above three percent to probably one to 1.5 percent for this year. The labor market has begun to deteriorate. The credit crunch is a very big deal for the economy," said Hubbard. "Having said all that, I do expect a recovery in the latter part of this year, fueled in no small part by monetary policy actions and fiscal policy actions."
Earlier this year, the federal government enacted an economic stimulus package that will provide most middle and low-income taxpayers with a rebate check, as well as tax relief to spur business investment. The Bush administration has also encouraged mortgage lenders to renegotiate loan terms with financially-strapped borrowers facing foreclosure on their homes.
Across the United States, tens of thousands of homeowners have been forced out of their homes because, as their mortgages re-set at higher interest rates, they were unable to make the monthly payments.
Some in Washington are calling for more aggressive action to strengthen government oversight and regulation of the credit markets, not only to soften the blow of the current crisis, but to stop the wholesale issuing of risky loans, blamed for the current mortgage mess.
Democratic Senator Charles Schumer of New York says inaction by President Bush has made a bad economy worse.
"Had the administration acted more proactively earlier, particularly about the housing crisis, when many of us were asking them to, we would not have gotten up to this point," he said.
Schumer was speaking on ABC's This Week program. But Republican Senator John Kyl of Arizona says Democrats are far from blameless when it comes to America's housing and credit woes.
"Of course it was not the Bush administration as much as it was Democrats in Congress who were pushing the lending institutions to get out there and lend more money, even to unqualified buyers," said Kyl.
In coming days, new economic data will be released on U.S. home sales, consumer spending, and the gross domestic product. The GDP figure could provide significant insight as to the severity of America's economic hardship.