Fundamental question: Is economy really OK?

[HT:TP]

"Strains in financial markets have increased significantly and labor markets have weakened further,"

the Fed said in a sober assessment Tuesday. But in deciding against lowering interest rates, the central bank signaled that it didn't see the economy's present situation as dire. Nariman Behravesh, chief economist at Global Insight, a Lexington, Mass., forecasting firm, says

"If the issue is whether the U.S. had a dynamic, resilient economy, and that the long-term trends are positive, I completely agree. ... It's important not to get carried away with gloom and doom."

After turning negative in the final three months of 2007 and growing at an anemic 0.9 percent in the first three months of 2008, the nation's gross domestic product grew at 3.3 percent in the April-June quarter. A survey of CEOs by accounting firm PriceWaterHouseCoopers found that they are not planning cutbacks of people, products or services.

Instead, the CEOs are focusing on opportunities to improve efficiency and ways to emerge from the slowdown in a better position to compete...

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