Pianalto, Sandra

Fortunately, despite the housing risks I have described, other sectors of the economy still look pretty good.  For the most part, consumers are still buying things.  Businesses are still investing in new plants and office buildings.  And foreign economic activity also remains strong, which provides an additional source of demand for our goods and services.  Certainly the tone in labor markets has been very positive lately.  Continued hiring suggests a high level of business confidence about economic growth next year.

            Think of it this way.  We seem to have two economies at work - the housing economy, which is experiencing a very large adjustment, and the "everything else" economy, which is performing fairly well.