Can the U.S. economy keep its head above water?

(AP Photo/Richard Drew)

Stocks rose moderately Thursday after a report of an increase in new jobs during December eased some concerns about the economy.

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Can the U.S. economy keep its head above water?

Hiring in the U.S. slowed more than forecast in December and unemployment jumped to a two-year high, raising the odds that the Federal Reserve will cut interest rates by half a point this month to ward off a recession. Payrolls rose by 18,000, capping the worst year for job creation since 2003, the Labor Department said today in Washington. The jobless rate increased to 5 percent from 4.7 percent in November, while the Institute for Supply Management said growth in U.S. service industries cooled last month.

How to avoid recession? Let the fed work

Greg Mankiw/The New York Times

The question on the minds of many in Congress and in the White House is this: What they should be doing now to keep the economy on track? The right answer: absolutely nothing. This advice isn’t easy for politicians to follow. Because economic downturns mean fewer jobs and falling incomes, they are painful for many families. Voters can confuse inaction with nonchalance and send incumbents packing. But just as patients should avoid doctors who recommend radical surgery for every ailment, voters should be wary of politicians eager to treat every economic ill. Sometimes, bed rest and wait-and-see are the best we can do.

Recession is coming

Matthew Rothschild/The Progressive

The crisis in the housing market is spilling over into other sectors of the economy. Meanwhile, consumers, who are up to their necks in debt, didn’t bail out the economy over Christmas with more spending. And gas prices remain high. Bush may lose a few percentage points in the polls. The wealthiest Americans might not make much money in the stock market. But millions of other Americans will lose their homes, their jobs, and their health insurance. Just as the benefits of a growing economy are unequally distributed, so too are the costs.