On the end of the recession: I think we're approaching the bottom. It's getting worse more slowly. I suppose one could take some encouragement from that. But you'd be wise unwise to take too much. The fundamentals are still out of whack. Americans are still deep in debt. Mortgage foreclosures are soaring. Housing prices continue to drop. Job losses are mounting. And the banks are still sitting on a mountain of non-performing loans.

On the shape of recovery: If there were a letter somewhere between U and L, maybe Q, I'd choose it. It won't be a vigorous recovery, because consumers don't have the money to make it a vigorous recovery. They can't borrow, they're homes are worth substantially less than before. And many are still worried about keeping their jobs. Consumers account for 70 percent of economic activity. Exports will not get us out of this mess, because the global market is in the doldrums. Businesses will not step up investment beyond replacing inventories if there aren't customers out there to buy their goods and services.

Beyond all this is the persistence of gross imbalances in the global economy. China, Japan, and the oil producers will not continue to lend money to Americans. So, almost inevitably, the dollar will resume its long-term decline. That means everything we buy from the rest of the world will cost more. Eventually, domestic demand in China and India and Japan could help enliven U.S. export markets and generate new employment that way. But we may have to wait years for this to happen.

On unemployment: High unemployment will remain with us for some time. Employment tends to be a lagging indicator, because employers are reluctant to hire until they know that there are enough customers out there. I wouldn't be surprised if the official rate of unemployment hit double-digits by the end of this year, and reached 11 or 12 percent next year. That doesn't even include the many millions who are too discouraged who are working part time who would rather be full time. Or who are too afraid to enter the labor market. And hours worked is declining too.

On what the Obama administration needs to do: Number one, we need a larger stimulus. That's not a popular thing to say and congress probably wouldn't approve such a thing. But the [Federal Reserve] has got to continue to pump a lot of money into the system. And we have to continue to run large deficits for a while.

Number two, the Obama administration does need to pass healthcare, universal healthcare. That will help average Americans balance their checkbooks. It's the single fastest growing item of consumer expenditure. It has reduced real wages. And it is responsible for gigantic deficits, government deficit.

On what might cause a double-dip: State and local deficits are resulting in major service cut-backs and tax increases at the state and local levels. The result is a gigantic fiscal drag, in the range of $350 billion over the next two years. That offsets more than half of the Obama stimulus.

Ideally the administration should move to offset those state shortfalls. Or, at least give the states time to deal with them, some breathing room. The states are not, by their constitutions, allowed to run deficits. So they have to either cut services or raise taxes. Both moves slow the economy. The size of the shortfalls at the state and local level are staggering because revenues are down while demands for public services are up, given the economy. So, the real challenge is: how can the administration help the states without going back to congress and seeking more stimulus? There may be ways for the federal government to absorb more Medicaid payments in the short term. Perhaps lending the states additional funds, perhaps helping with the states' bonding authorities. But all of that is probably not enough.

Right now we've got shortfalls in half of the states, and that will soon be up to 60 percent. Most of the worst-hit states are very populous and most of them have large populations of immigrants and poor as well as lower middle class. Will there be a tipping point at which enough states are in trouble that congress comes to their rescue? Possibly.

But before that happens, the fiscal drag could be so large as to seriously harm any recovery. Republicans are making such a big deal about deficits right now -- as they always do -- that the public is growing concerned about deficit spending. That's frankly absurd, given that the government is acting as the spender of last resort here. But, politics is politics.

On deficits: It is easy for demagogues to get the public upset about government deficits. Ross Perot did it in 1992. The Republicans who spent more under former President George W. Bush than any administration has spent over eight years apart from World War II have suddenly become aware of deficits, when they're responsible, when Bush is responsible, for most of the current one. Nonetheless, if you say the same thing over and over again, people start believing it. And unfortunately, the Republicans' message is beginning to get through, although notwithstanding that it's completely, completely false.

On health care: Remember -- the Republicans have been successful since Harry Truman was in the White House in using healthcare as a weapon -- using the democratic health care plans as a weapon -- to frighten the public and win back midterm elections. They did this in 1950, they did it as recently as 1994. They're going to try to do it in 2010.

On why this isn't a normal recession: This is an unusually deep recession and it's caused by an asset bubble popping. This is not the normal recession caused by the Fed overshooting. So recovery here is going to be very gradual. It's going to depend on consumers slowly building up enough cash to feel comfortable spending again. Businesses slowly building their inventories to the point they need to rehire. And government maintaining enough deficit spending to pick up the slack.

On what the recession looks like: I expect that we'll see a bit of a recovery next year. But it will be very slow and tepid. There will be Wall Street rallies along the way, just as there were earlier this week and late last week, as investors try to outguess each other and climb on any bandwagon they can find. But the stock market is not going to really catch fire. In fact I don't think we're going to see any long-term rally or bull market for perhaps three years. I don't expect a sustainable bull market for years.

It's impossible for the economy to have a strong recovery unless consumers have more money in their pockets. And I don't see where that money is going to come from.

Robert Reich, a former U.S. secretary of labor, is a professor of public policy at the Goldman School at the University of California, Berkeley.