There was so much good economic news that stock market investors got carried away. Stock indexes reached levels that were not justified by realistic estimates of future earnings. Some adjustment in the markets was inevitable. There is no question the slowdown is painful, that many companies, particularly in manufacturing and high-tech sectors, are experiencing wrenching adjustments. Some workers are being laid off.
New jobs are scarcer.
But Congress should avoid making bad policy in an over-reaction to what is likely to be a short run problem. The fundamentals of the economy are very strong. The unemployment rate in February was 4.2 percent and the economy was still adding jobs. This unemployment rate is far lower than at any time in the 1970s and 1980s. The Dow Jones index has fallen but this follows a period of extraordinary increases.