We are already in recession.The various prognosticators trying to see over the horizon by jumping up and down on their statistical trampolines will not get the official word for another three months. But without housing employment, the US would have been in at best a stagcession over the past three years. Now there is no housing, no housing employment, and the consumer spending derived from home equity is gone.Inflation is guaranteed by the bidding up of commodity prices and the flip side, the falling dollar. Very likely the Fed will panic again, this time to the upside. The same matrons screaming at their husbands during the credit crunch will be screaming just as loud for rate hikes when they see their dollars eroded by the very cut they demanded in the first place.
While some, notably Larry Summers call for additional rate cuts, the likelihood these will produce demand are low in the present environment. The risk is that the Fed will see the inevitable inflation rounding the corner and panic to the upside.
Demand should be generated by government spending on infrastructure and energy projects. The market has proven it is blind to the upcoming global catastrophe. It is time for the government to "make the market" and get us off the dime.