U.S. Economy sluggish, no end is sight

A government report, released Friday, shows the US economy is up, but not by much In a much anticipated speech on Friday, Ben Bernanke suggested the government might do more to stimulate the economy, but took no steps of his own.

JACKSON HOLE, WY (Catholic Online) - The economy grew with a sluggish 1 percent increase in gross domestic product (GDP). This is down from the anticipated 1.3 percent. Jan Hatzius, chief economist at Goldman Sachs Group, responded to the news by saying, there is a 1 in 3 chance of another recession.

Economic recovery in the U/S. has remained flat, even as experts predicted a slow, but steady recovery. Still, the fragile recovery has been hurt by a series of unprecedented events that have kept growth low. Unemployment has remained high as companies are afraid to hire. Congress engaged in a months long, partisan debate over the debt ceiling, and the housing market has dropped, against predictions of growth. 

Standard and Poor's downgrade of the U.S credit rating has also had an impact on investors, although far less than what was anticipated. The European markets have been teetering on the brink of collapse and with European Union leaders and bankers unable to reverse the situation, the outlook remains grim.

To solve the problem, Bernanke suggested that there was more the government could do to stimulate the economy, although he was not specific in his comments. Fiscal stimulus may be what's needed, but getting it accomplished may be another problem. Strong fiscal conservatives in Congress have sent a message to the Obama administration that they will not approve any new spending unless there are cuts made to match, and they are unwilling to accept "tax increases" although there is much debate over the anticipated new year's expiration of tax breaks and if they would amount to tax increases for the wealthy.

The political pickle that Obama is in may keep the government from pursuing robust Keynesian economic policies that more and more economists appear to be calling for. If the need for well planned, targeted stimulus isn't met, the recovery will remain sluggish at best, or may fall into recession once again. Given the pre-election deadlock of capitol hill, there is little reason to be optimistic that the government  will do anything meaningful. 

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