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|  Segment# |

| 1 |

| Location |

|  |

|  Date |

| 1/10/2008 |

| |

|  Story Name |

| BRACING FOR RECESSION RECESSION FEARS |

| |

|  Notes |

|  |

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|LAKSHMAN ACHUTHAN, PROFESSOR KIT YARROW |

|18:30:53 |

|Prepared by The Transcription Company, , (818) 848-6500 |

|Which takes sole responsibility for accuracy of transcription |

|18:30:53 CHARLES GIBSON |

|(OC) Good evening. First, it was housing. Then, it was jobs. Now, |

|still another sign of economic troubles, rattled consumers seemingly too |

|scared to spend. |

|18:31:03 CHARLES GIBSON |

|(VO) Retailers today reported dismal December sales, the worst holiday |

|shopping season in five years. Macy's, JCPenney, the Gap, Target, all |

|down. |

|18:31:13 CHARLES GIBSON |

|(OC) Taking note of all this, Federal Reserve Chairman Ben Bernanke said |

|today the Federal Reserve is not forecasting a recession, but will, he |

|said, cut interest rates to prevent one. ABC's Betsy Stark is with me. |

|And Betsy, you don't often hear the Fed chair promising interest rate cuts |

|so publicly. |

|18:31:30 BETSY STARK, ABC NEWS |

|(OC) Charlie, it is unusual for the Fed chairman to send such a clear |

|signal. And what it tells us is that the Fed knows it may have to cut |

|interest rates more aggressively, at least half a point at the next |

|meeting, to help keep the country out of recession. While the Fed isn't |

|forecasting a recession yet, plenty of other forecasters are, and it would |

|hurt. |

|GRAPHICS: BRACING FOR RECESSION |

|18:31:53 BETSY STARK |

|(VO) No one's whispering about the R word anymore. Now, they just come |

|right out and say it. |

|GRAPHICS: RECESSION |

|18:31:58 ALAN GREENSPAN, FORMER FEDERAL RESERVE CHAIRMAN |

|The probabilities of a recession have moved up. |

|18:32:00 SENATOR HILLARY CLINTON, DEMOCRAT |

|Slipping toward a recession. |

|18:32:02 ECONOMIST, MALE |

|Risks of recession... |

|18:32:04 SENATOR HARRY REID, SENATE MAJORITY LEADER |

|America's looming recession. |

|18:32:05 MELISSA FRANCIS, CNBC REPORTER |

|The US economy will slip into recession this year. |

|18:32:08 BETSY STARK |

|(VO) The traditional definition of recession? |

|18:32:11 LAKSHMAN ACHUTHAN, ECONOMIC CYCLE RESEARCH INSTITUTE |

|Usually, you see two negative quarters of GDP. |

|18:32:13 BETSY STARK |

|(VO) Marked by rising unemployment and a slowdown in consumer spending. |

|But if there is a recession, there will be no headline announcing when it |

|starts. |

|18:32:23 LAKSHMAN ACHUTHAN |

|We will not know when it started for a year or so after it's begun. |

|18:32:29 BETSY STARK |

|(VO) So if the experts won't know, how will you? Well, even if your |

|financial situation stays the same, you're likely to feel different if |

|people all around you are losing their jobs and their homes. |

|18:32:42 PROFESSOR KIT YARROW, CONSUMER PSYCHOLOGIST |

|It causes us to feel fear that we might lose what we have. |

|18:32:46 BETSY STARK |

|(VO) The fear is contagious no matter how wealthy you are. Low-income |

|consumers may fear they won't be able to fill up their gas tanks. |

|Middle-income consumers may fear their homes will be worth less than what |

|they paid for them. Upper income consumers may fear a falling stock |

|market will decimate their retirement funds. |

|18:33:06 PROFESSOR KIT YARROW |

|People are really anticipating a future that might be worse, which is |

|causing them to pull back now. |

|18:33:12 BETSY STARK |

|(VO) People we talked to today are already hunkering down. |

|18:33:16 CONSUMER, FEMALE |

|I always think twice before I buy something new. And now, I'm thinking |

|three and four times. |

|18:33:20 BETSY STARK |

|(VO) The pullback in spending sets a vicious cycle in motion. As |

|consumers spend less, sales fall, businesses cut production, many stop |

|hiring workers or lay them off, unemployment rises, incomes fall, and |

|consumers pull back some more. |

|18:33:36 CONSUMER |

|I was supposed to go out for dinner with a friend tonight, as a matter of |

|fact. And she called me and said, 'Could we eat in?" |

|18:33:42 BETSY STARK |

|(OC) You hear a lot of things like that in a recession. But keep in |

|mind, even if the numbers never add up to an official recession, things |

|can slow down so much that it still feels like a recession. In parts of |

|the country hit hard by the housing slump, it sure feels like a recession |

|already, Charlie. |

|18:33:58 CHARLES GIBSON |

|(OC) All right. Betsy Stark, reporting tonight. Thanks. |

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