Coming Week: Don't Expect Fireworks

Despite the swoon in equities, the economy so far appears to have been able to avoid a recession. Propped up by the federal government's stimulus checks approved by Congress earlier this year, real GDP grew 1% in the first quarter, the second straight quarter of sluggish growth, according to the federal government's final revision of the number last month.

Still, high fuel prices mitigated the stimulus package's impact. Treasury Secretary Henry Paulson said Thursday that high crude prices likely would prolong the economic slowdown.

Some economists and lawmakers are considering another round of stimulus, with alternatives ranging from a new set of checks to some sort of investment in infrastructure, The Wall Street Journal reported Thursday.

Whether government does or does not act may not matter, says Nigel Gault, chief U.S. economist for Global Insight. He points out that the annual impact on consumers from the rise in gasoline prices from $3 to $4 a gallon roughly equals the amount taxpayers are receiving in their stimulus checks.

Only time is likely to improve the country's economic woes, Gault says. "I don't think the government has magic wands that they can wave to make things better," he says.

Sluggish growth and inflationary pressures have complicated efforts by government officials and the Federal Reserve to spur the economy. The Fed has cut its key interest rate target 325 basis points over the past year but paused at the last meeting of the Federal Open Markets Committee.

While raising rates would dampen inflation by strengthening the dollar, the Fed also must contend with the still-slow growth and six straight months of job losses in the U.S. economy, including the 62,000 drop in nonfarm payrolls reported by the Labor Department on Thursday.