Economists and investors observed the September 18 meetings of the U.S. Federal Reserve’s Open Market Committee as something of a baptism for Ben Bernanke, the first major policy test for the Fed chair since he took office in early 2006. It remains to be seen whether Bernanke passed. In the face of stiff market pressures, he cut the Fed’s benchmark interest rate by 50 basis points, twice what many analysts had predicted. Markets cheered the decision and the Dow Jones Industrial Average spiked. But Bernanke faced criticism (Business Week) from economists, many of whom said before the decision that a half-percentage-point cut constituted a “bailout” and could fan inflation.

The move comes amid heightened global market concerns, spawned from a broad credit squeeze in the United States. Analysts now question whether debt problems, sparked by an implosion of the U.S. subprime mortgage market earlier this year, could lead to broader economic weakness. The “R” word, recession, has increasingly popped into news stories; Bernanke’s predecessor Alan Greenspan recently estimated (AP) the odds of a U.S. recession are greater than one in three.

Whether or not the country enters a recession—which technically requires two consecutive quarters of negative gross domestic product (GDP) growth—the present jitters may represent more than just jitters. An article in the Wall Street Journal notes the United States may be at a major economic turning point: “After sixteen years during which the U.S. mainly borrowed and bought while much of the rest of the world lent and sold, the global economy appears to be undergoing a fundamental shift.” As this Backgrounder notes, the United States has built up two large deficits, both in its domestic budget and in its trade balance.

But with the value of the U.S. dollar growing steadily weaker (Bloomberg) over the past several years —against not only the euro, but also the Canadian dollar, the Chinese yuan, and a host of other currencies—it is increasingly difficult for the U.S. consumer to spend freely on the global marketplace, draining a source of capital that historically has girded the world economy. Stephen S. Roach, Morgan Stanley’s chief economist, commented at a recent CFR meeting said that U.S. consumers are “hugely overextended,” noting that personal consumption currently accounts for 72 percent of U.S. GDP, a level unprecedented historically.

Yet even if U.S. consumers pull in their horns, it remains unclear what the effect will be on the global economy. A 2006 briefing (PDF) by the Royal Bank of Scotland Group argues that other national economies are “unlikely to emerge unscathed” if the spendthrift U.S. consumer stops spending. But in a recent interview, CFR’s Sebastian Mallaby argues that other economies may be ready to pick up the slack: “If you can have a bit more growth in Europe, continued extremely fast growth in China and other developing Asian countries, that kind of thing can make up for American consumption being flat.”