Iowa State University economist Neil Harl says the country’s economy appears to be "downshifting" because Americans have been living "well beyond their means" and acquiring too much debt.

"The decline has been so precipitous and it’s hitting the heart of our economic system to the point that I don’t think there’s any question that we’re in a recession and it, hopefully, will not get any worse than that," Harl says, "but I think it’s a grim time."

Iowa’s economy is doing well because farmers had a good harvest, with good commodity prices; the state unemployment rate is low and financial institutions here appear solid, according to Harl, but he says the downturn will "hit" the state sooner or later. As for Iowans who’re worried about their investments on the stock market, Harl has some advice.

"What can you ensure? How much of this can you go through? Can you endure a Dow at 5,000?" Harl asks. "I think we’re going to see (a) Dow of 5,000 and if you can’t, you’d better do some liquidating before it’s too late, but if you’ve got enough to get through this, I think the big losses have already taken place."

The Dow Jones Industrial Average opened higher today after falling to about 8,000 last week and Harl says it’s time for "more meaningful" regulation of the markets. "I think in addition to that we have to take a close look at our policies in other areas that have contributed to this and I think the matter of too much debt — how that can be approached, I’m not certain," Harl says, "Maybe there’ll be enough in this downturn cause people to have more discipline than they’ve had."

Harl says the country’s economy was vulnerable because of several factors — not only the staggering debts that individuals and companies were willing to acquire, but because of job losses in the manufacturing and information technology sectors. Harl made his comments this past weekend on I-P-T-V’s Iowa Press.