Housing has dipped following the end of the tax credits and Henderson said the bottom of the housing market “may be bumpy. A lot depends on incomes.”

“Businesses are strong. They have a lot of cash, but they are not making investments. Just like farmers make do with duct tape and baling wire, businesses are just covering the basic needs, increasing productivity but not building.”

That cautious approach comes from uncertainty — about the extent of the recovery, regulations and policies. “They don’t know what sales will do. They also are concerned about health care costs and regulations. They need stability, so they are not engaging, just waiting.”

Net export had also declined the last two quarters, spurred by higher crude oil prices. And debt weighs on the economy. “Debt could reach 150 percent of GDP by 2050,” Henderson said. “With higher interest rates, that could be 300 percent of GDP.

“We have some big decisions to make as a society. We’ve made promises to ourselves and now we have to decide on how to fund those promises or limit benefits. It’s a political question. We also need to invest in infrastructure (roads, bridges, electrical grids).”