Editor’s note: , William Neal Reynolds Distinguished Professor, Department of Agricultural and Resource Economics, North Carolina State University. This is one of a three part package about the state of the U.S. economy.

RALEIGH, N.C. – If the economy is a car, then it is down-shifting. After a decent sprint out of the depths of the recession in mid 2009, most economic indicators are showing progress, but the pace of progress is slowing!

For example, the broadest measure of our economy – gross domestic product – had it’s growth rate cut from 2.4 percent to 1.6 percent in the second quarter. The growth rate is positive – meaning we’re not going in reverse – but we’re growing at a puny rate.

Jobs have also increased – good – but the national monthly gains have shrunk from over 100,000 in the spring to less than half that amount in the summer – bad.

And, forecasts for the August jobs gains – to be released Friday – are for an even smaller increase. While surveys show employers are firing fewer workers, they’re still not ready to hire in large numbers.

The big question is, why?

The answer comes down to the consumer. Consumers rule the roost in our economy, accounting for 70 percent of all spending. During the booming 1990s and early 2000s, consumers spent a lot of money and went into debt doing it.

Now consumers are being forced to come back to earth. Historic high debt levels are being pared back by consumers paying off debt and saving more each month. But while this is good for the consumer’s balance sheet, it’s bad for today’s economy.

The economy is growing slowly for one simple reason – consumers aren’t spending like they did before the recession. And they won’t until they are comfortable with their debt levels. While difficult to estimate, economists think consumers are about half done reducing debt. This means another two to three years of frugality!

Unfortunately, there’s no "easy button" to push to magically create jobs and income. The good news is that consumers are doing what they need to do – working off excesses they built up in earlier years. The bad news is, this takes time.

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