U.S.: Bush May Not Be Stepping Into Quicksand

How weak is the economy that President Bush inherited? Recent signs of slower job growth, sinking consumer sentiment, and a softer housing market have turned up the volume on recession talk. But overall, the data still signal the economy is only slowing, not contracting. And absent a shock, such as a sharp drop in stock prices, the expansion should endure.

Clearly, though, the economy ended 2000 on a soft note, and that tone will continue into at least the first half of 2001. The Commerce Dept.'s initial look at fourth-quarter economic growth on Jan. 31 will confirm that. That's also the day the Federal Reserve sits down to decide on interest rates. Economists surveyed by Standard & Poor's MMS expect real gross domestic product to have grown at an annual rate of 2% in the quarter, after a mere 2.2% advance in the third quarter. The expectation means growth fell from a 5.2% gallop in the first half to just above 2% in the second, the slowest two-quarter pace in five years.