U.S. worried about a possible recession

LOS ANGELES (KABC) With the rising cost of food and energy, plus the depressed housing market, a lot of people are worried about a possible recession.

Wall Street is gearing itself up for a rocky road. Rumors of recession are growing for the U.S. economy. This has lawmakers in Washington looking for ways to try and make sure if a downturn happens it doesn't last long.

On Capitol Hill, a Joint Economic Committee is looking at ways to kick start the economy.

The goal is to get more money to consumers to spark spending. The subprime mortgage mess is forcing many Americans to cut back.

Homes prices are down and home sales are slipping. Plus, the lending crisis is taking a heavy toll on the nation's biggest banks. Citibank announced $10 billion in losses in the fourth quarter alone.

Lawmakers want to get cash to consumers fast.

"Direct injections of cash into the economy through both immediate consumer and government spending are the shots in the arm needed to ward off a recession," said Sen. Charles Schumer, Chairman of Joint Economic Committee.

The impact could spread around the world. The American consumer keeps factories in China humming.

"When we look at the Chinese economy, 37 percent of GDP are exports," said Yiping Huang, Citigroup. "If that gross is gone, I fear that we'll see lots of overcapacity or we'll see deflation or we'll see lots of nonperforming loans. It's actually pretty scary."

Others are more hopeful and point to growing consumption by Chinese buyers, that could not only help support China's economy, but also give U.S. exports a boost.

The subprime concerns could grow as Merrill Lynch is expected to announce earnings later this week. Some say Merrill Lynch could report big losses as well.

Meanwhile, IndyMac, a local mortgage company, has announced it's laying off 25 percent of its work force because of the slowing housing economy. A lot of those layoffs will impact workers overseas.

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