Another Economic downturn?

As President Obama prepares to meet with world leaders in Canada this coming week, is the United States now at risk of another economic downturn? And do the Feds have any real ammunition left to fight? Let's talk about that and more with our senior political analyst David Gergen. A lot of folks out there are expressing concern about what's called a double dip recession. David, I know you've been looking into this. How worried should we be?

DAVID GERGEN, CNN SR. POLITICAL ANALYST: Wolf, I've had a chance to talk to economists and people in New York and in the financial community about this. I find very little belief that we're actually going to have a double dip. What I do find is a growing concern that the economy is stalling out. That with these job numbers we've seen, the housing markets being what they are, commercial real estate still highly vulnerable, that we may not continue to experience the kind of growth that we were looking at, that it may level out. That would be very bad news for American workers.

BLITZER: Because some economists are saying the Federal Reserve has limited ammunition now, ready to go in case it's necessary to bail out this economy if you will.

GERGEN: That's right, Wolf. The most important way the Federal Reserve, and it's done an enormous job in preventing us from going into a depression, but their biggest tool as you know is interest rates. And they've had the lowest interest rates in modern history. They've already been maintaining them. So you can't go any lower. You know, they're 0.25 percent.

And indeed, Wolf, there are those on the -- and they're meeting tomorrow -- there are a couple Federal Reserve governors, I talked to one last week in Kansas City, who actually are worried about inflation and they would like to start raising interest rates. There is nowhere else to go down.

But it goes to the point that the Fed, there's not much more the Fed can do in the near term. They are withdrawing some of their support in the housing area. They could go back into the housing area and help shore it up but they can't do much more to stimulate at this point. That's why all the pressure is are we going to spend more money in Congress and the White House of course is setting off a huge fight.

BLITZER: Yes, spending money not what folks want to hear right now with the budget deficit and the national debt where it is right now. David, thanks very much for that.

GERGEN: Thank you.

Transcript From The Situation Room Aired June 21, 2010