WASHINGTON — Amid fresh signs that the nation is in recession -- and yet another jaw-dropping decline in the stock market -- Congress is gearing up to enact a new economic stimulus plan to help ordinary Americans.
But getting quick bipartisan agreement and White House support to help consumers is far from certain. The battle could be even tougher than the one that played out last month over the $700-billion rescue plan for the financial system.
Democrats and Republicans have starkly different views of what a stimulus package should contain, and President Bush has signaled his opposition to some of the key ideas being floated.
What could force compromise is the outpouring of evidence that the nation is headed for tough times even if the financial system should begin to stabilize.
The Dow Jones industrial average plummeted more than 700 points Wednesday after the government reported that retail sales sank 1.2% in September, the third straight monthly decline and the largest such pullback since 2005.
The unexpectedly steep drop was an ominous sign heading into the crucial holiday shopping season and comes as more Americans are losing their jobs.
"I believe the economy is now in a recession," said Richard DeKaser, chief economist at banking firm National City Corp. in Cleveland. "What today's retail sales report implies is that it will be steeper than many of us had feared."
The grim retail sales report coincided with a warning from Federal Reserve Chairman Ben S. Bernanke, who told a group of economists in New York that the government's plan to infuse $250 billion into the banking system wasn't a cure-all.
"Stabilization of the financial markets is a critical first step, but even if they stabilize as we hope they will, broader economic recovery will not happen right away," Bernanke said. He added that the Fed would continue to use all available tools to support the economy, leaving open the possibility of additional interest rate cuts.
Key members of both parties in Congress believe the government must find a way to put more money into the hands of average Americans, especially with consumer spending accounting for more than two-thirds of gross domestic product.
"Clearly, a significant initiative is required to promote job creation and economic growth," House Speaker Nancy Pelosi (D-San Francisco) wrote to Democratic members this week.
