President Bush and Federal Reserve Chairman Ben Bernanke sought to bolster confidence Friday that U.S. economic growth will recover despite a recent string of bleak economic reports. Two financial reporters examine how the slowdown is impacting American consumers.
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Judy Woodruff has our economy story.
From Wall Street to Main Street, fears about the U.S. economy continue to mount. Today, both President Bush and Federal Reserve Chairman Ben Bernanke said the government is responding and is prepared to do more to restore confidence in the economy.
Here to tell us more is David Wessel. He’s the economics editor for the Wall Street Journal. And Jane Bryant Quinn, she’s the best-selling author and columnist for Newsweek and Bloomberg.com.
Welcome to you both.
Today, another quite a day, on top of a week of — already we’ve seen a lot of turmoil in the economy. Today, David Wessel, the stock market fell almost 200 points. You had what is apparently an unprecedented bailout by the Federal Reserve of the nation’s fifth-largest investment bank.
Is the economy even worse off than we thought a few days ago?
DAVID WESSEL, Wall Street Journal:
Well, it’s sure looking that way. You know, the risk here is that we have a downward spiral, where something like Bear Stearns makes people worried about another investment bank, which makes everybody a little more worried about everybody else, so they make a few less loans, interest rates go up a little bit, even though the Fed is cutting them, and so forth. So, yes, the risk seems to be rising quite a bit.
Jane Bryant Quinn, do we know the full picture yet of how bad things are going to be?
JANE BRYANT QUINN, Columnist, Newsweek:
Clearly we don’t, Judy. I mean, every time we think, oh, we’ve got the last shoe to drop, Imelda’s closet falls over again and we have a lot more shoes on the table.
I mean, just a month ago, Bear Stearns said they had plenty of cash, don’t worry about the liquidity crisis. And then, in 24 hours, suddenly Bear Stearns is going broke.
And this is the problem with the lack of confidence. You simply don’t know what is on other banks’ balance sheets.