Economists Debate Whether Consumers Will Keep Economy Afloat

Capital spending by U.S. businesses has dropped in two of the past three quarters -- and some say the bellwether figure will keep sliding. Is this a signal that a recession is looming? Two economists joined "Morning Call" -- with radically opposed views.

Ken Goldstein, senior economist at The Conference Board, thinks America's financial health will be good -- but not great. He attributes his muted optimism to consumer spending "holding up," which he believes will balance out the capital expenditure drop. Goldstein said that the upcoming jobs report will show "enough income growth to keep consumer spending growing moderately -- not robustly, but moderately."

That tepid prediction is still more optimistic than Paul Kasriel's view: The senior vice president and director of economic research at the Northern Trust declared "it's only a matter of time until consumer spending stops 'holding up.'" Kasriel pointed out that individual spending in February would have been "considerably weaker" without factoring in electricity and natural gas. He says consumers are now beset by problems like their "home ATMs [equity] now draining funds, not refilling."

Goldstein rebutted: "The 'R word' is not 'recession,' but 'resiliency'."