Where is the economy headed?

Jon Hilsenrath and Sara Murray have an interesting piece (see here) in the Wall Street Journal today about the likely implications of the economic data that was released this week.  The piece has a very interesting graph (see below, click to enlarge).

Referring to the graph they say:

Among the reasons the economy is so vulnerable: Debt-laden consumers with scant savings are prone to slash spending when their incomes drop. Household confidence is more fragile. Individuals are moving less often to find jobs, making it harder for firms to fill vacancies. And the government, for decades the rescuer of last resort with interest-rate cuts, tax reductions and spending increases, has run out of string.
 
The authors do a nice job of noting the actions that have been taken in past recessions by the federal government to cushion the business cycle and to encourage stronger recoveries from recessions.  As they say, it now appears (given the obsession with the national debt) the government is "out of string."

Once upon a time there was a view held by both Republicans and Democrats that the government exercised a useful function by helping to "cushion" downturns and "encouraging" recovery from those downturns.  That consensus has been swallowed up by a political obsession with the national debt that is a mix of ideological fanaticism and economic nonsense.  What does it all mean?  Like most, I'm not really sure.  As the graph from the article demonstrates, the role of the government in economic growth has been undeniable in the past.  What happens when you attempt to prohibit that role?  We aren't sure.

Perhaps, as they say, this too shall pass.  In the mean time, we are left with governmental dysfunction unlike anything I have seen in my adult life.