STEVE INSKEEP, host:
Americans may want to take a look at that new super-cheap car, if they have jobs that are especially sensitive to changes in the economy. Yesterday, a top Wall Street investment bank warned that a recession is coming, though according to this forecast it will be a mild one.
NPR's Jim Zarroli reports.
JIM ZARROLI: The report from Goldman Sachs said the recession probably wouldn't be too severe, more like recession light. But it is coming this year, and it will probably last a quarter or more. Not every economist agrees with that assessment. Some say the economy's resilience will keep it expanding, if only slightly. But Goldman's preeminence made a lot of people take notice yesterday.
Commerce Bank's Joel Naroff said there is no question that pessimism has grown. One big reason, he says, was the spike in unemployment in December from 4.7 to five percent.
Mr. JOEL NAROFF (Chief Economist, Commerce Bank): If we don't get job growth, we don't get income growth. We don't get consumer spending, and we do get a recession. So I think that it's the employment report that has created real uncertainty now where the economy is going.
ZARROLI: Equally disturbing, he says, was a recent report from the Institute for Supply Management showing a big drop in manufacturing activity. It suggested that troubles in the housing market have infected other parts of the economy. The bad news has worn away at stock values, and Naroff said it's led to a debate at the Federal Reserve.
It is a familiar debate. Is the economy growing so weak that the Fed needs to be relaxing interest rates to encourage investment and keep people spending? Or will that just make inflation worse?
Mr. NAROFF: I think that battle is still on. But I think the recent weak economic data has probably tipped the scales more in favor of the concern about a recession.
ZARROLI: A lot of people seem to agree right now. Reuters released a survey yesterday of 20 major economists. And every single one thinks the Fed will cut rates. The only question is how much. Eight of the 20 think a big cut is coming, such as a half a percentage point.
Jim Zarroli, NPR News, New York.