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Economic Outlook

Economic OutlookAlready experiencing a slump, the economy has many experts debating whether a full-fledged recession is on the way.

Medford/Somerville, Mass. [04.20.01] For the fourth time this year, the Federal Reserve cut interest rates, sparking a flurry of trading on Wall Street this week. While the rally may have reminded some of the record economic growth of the last eight years, many economists agree that the U.S. economy has slowed. The question is: for how long?

Lisa Lynch -- an economist at Tufts' Fletcher School and the chief economist at the Labor Department during the Clinton presidency -- said the recent fluctuations and the resulting uncertainty has ended "the Goldilocks economy."

"We have a mixed picture, and I think that's what drives everybody a little batty, because there's not a clear message here," Lynch said on a recent edition of PBS' The Newshour with Jim Lehrer.

According to Lynch, certain economic indicators give investors a reason to be concerned. The Tufts expert cited recent unemployment figures as evidence of a slowdown in several areas of the economy, particularly manufacturing.

Until recently, Lynch said, "the service side of the economy has been able to pick up the slack from the decrease in employment in manufacturing. And that did not happen in the most recent numbers."

But not every part of the economy looks grim.

"We still have an unemployment number of 4.3 percent, which is extraordinarily low from a historical view," Lynch told PBS' Newshour. "We have workers earning more money. We have consumer confidence high, we have strengths in the economy in the housing sector, in financial services and health care."

The Fletcher economist says the current slowdown is more likely a temporary pause by investors and not the beginnings of a recession.

"We've has a very rapid heady period of growth in the United States and you can sort of imagine that people need to take pause, a little rest, get our digestion system going again, and then hopefully take off," Lynch told PBS.

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