Anger turns to anxiety in debt crisis

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Zandi noted that neither his parent organization, Moody's, nor Fitch, the other of the three major rating agencies, has downgraded U.S. debt.

"I don't think it (the S&P downgrade) is going to amount to a lot," said Peter Morici, a University of Maryland business economist. Still, Morici said, "The United States deserves to have this happen," because of its clumsy handling of economic policy.

Friday's jobs report — a net increase of 117,000 new jobs in July and an unemployment rate ticking down to 9.1 percent from 9.2 percent in June — was better than expected by forecasters, but it did little to ease fears of a new recession. The jobless rate now has exceeded 9 percent in all but two months since the recession officially ended in June 2009.

Recent reports suggest the economy is slowing to a near-stall.

The U.S. gross domestic product grew at less than 1 percent in the first six months of 2011. Adding to the woes: Manufacturing has slowed and so has consumer spending. At such a sluggish pace, job creation can't even keep up with population growth. GDP growth needs to be above 3 percent to push down unemployment significantly.

After dropping more than 500 points on Thursday, the Dow industrials seesawed Friday, finally closing up 61 points, while other major U.S. stock indexes were down. And that was before the S&P downgrade.

Ross Baker, a political science professor at Rutgers University, suggested that the debt-limit issue is quickly receding into the background and becoming less relevant to consumers. "You can't eat a debt-limit extension," he said.

"I suspect that when members of Congress go back to their districts, people are going to come up to them and say, 'My 401(k) has cratered. What are you doing about it?'" said Baker. And least for those who have jobs and 401(k)s.

While the public is clearly unhappy with leaders of both parties, the stalling recovery will likely hit Obama and his Democratic allies the hardest. As he prepares for next year's re-election race, the president clearly needs to be seen as doing more to help the economy and to create jobs.

"There's not a lot of precedent for an incumbent president getting re-elected in economic circumstances like this," said William A. Galston, who was President Bill Clinton's top domestic policy aide in 1993-95.

"People know the economy is bad. And there's no way even the most artful politician can convince them that it isn't," said Galston, now with the Brookings Institution. "And anybody that tries to convince them that things are getting better is going to get his head handed to him."

White House and Treasury officials reject the idea that a double-dip recession looms, insisting that the economy will continue to grow and create jobs, if slowly.

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