TODAY Money writer John Schoen joined us for a live Web chat Friday afternoon about the state of the economy.
"The mood appears to be worsening, leading to a concern among economists and others of a self-fulfilling prophecy -- that worried consumers will slow spending, further hampering the recovery and perhaps raising the risk of a double-dip recession or at least yielding years of sluggish growth," John wrote in the intro of the chat. Read John's full article on the subject here: http://on.today.com/kcdptM
Here are two questions from his chat and the complete archive:
Barbara H.'s question:
It does seem to me that the quickest way to get the economy going again is to have a strong housing market. That seems very problematic at this time.
Housing is definitely a major roadblock. Since the 1930s, we haven't had an economic recovery without a housing revival. The problem is that the process of mortgage defaults and foreclosures is playing out in slow motion - until the large supply of foreclosed homes comes down, housing will remain stuck in recession. If we could figure out how to prevent those defaults and keep people in their homes, we could speed up that process.
Jacky Lai's question:
If the economy is not productive and if people do not have enough money in hands, what is the next step and solution?
The economy is growing - it's just not growing fast enough.
It's worth taking a minute to drill down on the word "recession." Many readers use the word loosely to describe a lousy economy - jobs are hard to get, house prices are falling, wages aren't rising. That's fine. But we use it more narrowly - if the economy is expanding quarter after quarter, that's not a recession. (The economy is not "receding.") Today we have both of those conditions - very slow growth that's not coming fast enough and can't put enough people back to work nor get the housing market off the bottom.
It's also important to recognize that the U.S. economy is a $15 trillion machine with a lot of moving parts. Some of those - like housing - are still in a deep recession. Many small businesses are still seeing business dry up. So when growth is this weak, parts of the economy - or regions of the country - can be in recession even though the entire economy is moving ahead slowly.
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