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GUY RAZ, host:

We're back with ALL THINGS CONSIDERED from NPR News. I'm Guy Raz.

You might be forgiven for being confused about the mixed messages coming out on the economy. Last week, the stock market rose, but so did the unemployment rate. The nation lost jobs overall, but the number of private sector jobs was up.

Now here's a thing most economists agree on: The recovery has slowed. And later this week, President Obama will try to address the problem with a package of tax cuts, mainly for small businesses. The price tag could be as high as $300 billion.

Either way, says Mark Zandi, the chief economist for Moody's Analytics, the economy needs some sort of push.

Mr. MARK ZANDI (Chief Economist, Moody's Analytics): It will have an impact. I think it will be small, but I think it's worth doing. And anything that can get more credit out to hard-pressed small businesses, I think, would be helpful.

Small businesses are key to the job machine. They employ half of all workers in the United States. And in the last economic expansion, they accounted for two-thirds of net job creation. So more credit to small business would be helpful. But at the end of the day, this is small and won't have a significant impact, at least not in the near term.

RAZ: I mean, some economists have argued that the original stimulus package was not large enough, and that's why we are facing the economic environment we face today. Is this, in a sense, sort of stimulus-lite?

Mr. ZANDI: Yes. I do think that the magnitude of the recession was much greater than anyone had thought. We dug a deeper hole for ourselves than we were thinking back when the Recovery Act was put together in early 2009.

And I think it would've been prudent if it were larger and more expansive. And in some sense, we are expanding on that stimulus, that Recovery Act through these different things that we've put in place since then and talking about right now.

RAZ: I'm curious what you make of the unemployment situation. I mean, it seems to be getting worse rather than better, and all the projections seem to suggest that it will continue to get worse.

Mr. ZANDI: Yes. The unemployment rate rose to 9.6 percent in August. While we're creating jobs, we're not creating jobs fast enough to forestall increases on unemployment because, as you know, people enter into the workforce every month. So we need 125, 150,000 per month just for a stable rate of unemployment.

So in all likelihood, unemployment will rise through the end of the year. If you told me that by year's end, the unemployment rate was back at 10 percent, I would not be surprised.

RAZ: Mark, so much of our economy is dependent on consumer spending. And I wonder whether you think what we're going through now and what we've been going through for the past two years will begin to sort of alter that dependency on consumer spending in the coming years.

Mr. ZANDI: Yes, that's already happening. You know, I think it is fair to say that for the past quarter-century, the U.S. consumer has powered our economy's growth, in fact, arguably, entire global economy's growth.

And this period that we're going through marks an inflection point with regard to that. Consumers, U.S. consumers, are no longer in a position to power growth here or abroad. And that means if we want to maintain the kind of growth rates that we've experienced historically, we have to have another source of growth. And I think that's got to come from overseas. We've got to start producing the things that folks in China and Brazil and Russia, the emerging economies that are fast-growing, will want to consume. And frankly, I'm optimistic about that.

RAZ: I mean, for so long, it was an article of faith in America that you should always spend more than you can afford for a house because it's going to appreciate in value. And you should always put your money in the stock market for the long-term because you will always get a return. But, in fact, some of those paradigms were overturned in the past few years. So why should people continue to believe in them?

Mr. ZANDI: Well, in the long run, those assumptions, those working assumptions are correct. I mean, it doesn't mean in any given period of time that you're not going to have ups and downs. But over the long run, I think those assumptions are valid, and people should invest based on those.

But the other thing that people need to remember is they need to be diversified. That's the one key principle. And I think during the stock market boom in the '90s, during the housing boom in the last decade, people lost sight of that and they got burned by that.

So hopefully, going forward, they will make sure that their investments are equally balanced and reflect where they are in their own life cycle.

RAZ: That's economist Mark Zandi. He is the chief economist for Moody's Analytics. He joined us from Pennsylvania.

Mark Zandi, thank you so much.

Mr. ZANDI: Thank you, Guy.

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