Ben Bernanke's take on the U.S. economy: risk, uncertainty

The U.S. economy is in the middle of six months of churning and readjustment that add up to no growth and maybe even shrinkage.

So said Ben Bernanke, the nation's central banker, to Congress on Wednesday. What the Federal Reserve chairman described is a cyclical episode only, not a head-turning crisis. Six months is not long, particularly if you are halfway through it. Still, he said, uncertainty is high, "and the risks remain on the downside."

Probably the nation is in a recession — and we use that word even though it has not cooled enough for the economists to grasp it. The downturn began in housing finance and cuts deepest there.

Nationwide, the building of new houses is down more than 60 percent in two years, and will fall more, Bernanke said, because there remains a glut of houses for sale. But people will buy them. Money is still available for solid mortgages, if not for wobbly stuff.

It is the same with corporations: Solid ones can borrow, but there is little demand for junk. Borrowers have to show they can pay, and fewer players in the economy can borrow solely on their good name without putting up collateral.

All this is the classic stuff of recessions. And yet, there are other signs of recession not happening, or not strongly. Interest rates are low. The stock market is down, but not hugely. American consumers have cut back, but not drastically, and foreign consumers (thanks to the cheap dollar) remain strong. American manufacturers are mostly OK,so far.

People ask: Is this all? If it is, the presidential candidates can forget the promises of economic salvation. The recession will be over before they get there. If not, the story changes, and there will be more demand for rescue by Congress and the new administration.