"By itself, the fiscal spending package is probably not enough to keep the economy from going into a downturn," said Mr. DeKaser. "But combined with the Federal Reserve's rate-cutting, it should be enough to keep the economy from dipping into a recession."
Other economists are not so sanguine, but they say the fiscal stimulus will help give the economy a jolt in the second quarter, which starts in April. The package could mitigate the effects of the downturn or jolt the economy out of it, says economist Mark Zandi of Moody's Economy.com.
Congress and the Fed may yet have some leeway because the economic indicators are not yet tilting toward recession. For example, new claims for unemployment remained steady at 300,000 for the week ending Jan. 19, the Department of Labor reported Thursday. This indicates that so far there are no widespread layoffs, says economist Bob Brusca of Fact and Opinion Economics.
In December, concerns heightened that the economy had already slipped into recession because new jobs grew at a low rate and unemployment jumped to 5 percent. "So far it looks like January is reversing some of the dim economic statistics from December," said DeKaser.
However, existing sales of homes dropped 2.2 percent in December and were down 12.8 percent for all of 2007. Median home prices dropped 1.8 percent for the year, the first nominal decline in any year since the Great Depression.