Stock markets fall around the globe and the Dow Jones Industrial average sinks 416 points in a day. Tuesday’s stock market tumble, abrupt and steep, was scary.

With volatility continuing as of yesterday, we may be entering a phase of intensified unpredictability in stocks.

Whether this portends a recession or just slower economic growth remains to be seen. In any case, it’s a reminder that Congress needs to deal with problems in the economy that impede growth, including taxes, regulation, and health care.

Much of this week’s negative economic news was either blown out of proportion or already known. This suggests that the market’s tone is skittish because stock prices are high and because no one believes that the business cycle has been repealed.

Start with Monday’s headlines that the former Federal Reserve chairman, Alan Greenspan, was forecasting a recession. Reports exaggerated his nuanced statement: “While, yes, it is possible that we can get a recession in the latter months of 2007, most forecasters are not making that judgment.” The reports omitted his depiction of the global economy as “benign and stable.”

Then comes Wednesday’s announcement that the fourth-quarter gross domestic product was revised downward to an annual rate of 2.2% from a prior estimate of 3.5%. This was not new information because the decline was caused primarily by a prior downward revision to inventories.

The week’s housing data were pessimistic and may indicate that the housing sector has not bottomed out yet. Housing declined 14% and building permits declined by 2.6%. Existing home sales rose, but sales of new homes declined by 17%, which was the largest monthly decline in 13 years.

But, as my colleague at the Hudson Institute, John Weicher, observed, “One month of these data never means anything, especially in the winter. January’s decline in new home sales comes after a 9% increase in December.” And the Office of Federal Housing Oversight house price index, released yesterday, showed that house prices in the fourth quarter of 2006 were 6% higher than last year’s.

The most troublesome of the week’s data, perhaps presaging a slower economy, came from a 6% decline in new orders and a 3% decline in shipments of core capital goods, defined as nondefense capital goods excluding aircraft. This carefully constructed measure shows that production in the economy is likely to decline.

Yesterday’s rise of 1% of personal incomes in January was a positive sign of growth. But it was accompanied by signs of higher inflation, hence the postponed hopes for a Fed rate cut. The increase of manufacturing activity as widely reported yesterday by the Institute for Supply Management’s Index of Manufacturing Activity was practically meaningless because it measures future plans of only 400 unweighted firms rather than past economic production.

With the rapid growth phase of the economic recovery behind us, our challenge now is how to keep the economy going. A growing economy is essential to Americans’ well-being, and generates not only higher incomes, but also rising tax revenues — with lower rates — to pay for the war in Iraq, food stamps, health care, and spending on medical research.

Inasmuch as the housing sector has not yet recovered, consumer spending is high relative to levels of income. And while services are gradually taking the place of manufacturing, we need to look to other sectors of the economy to spur growth. Some possibilities include nonresidential construction, software, or exports. Right now, we don’t know which one will produce growth, hence investors’ anxiety.

This anxiety is exacerbated though by our inability to correctly measure change in our $13 trillion economy. According to Bear Stearns chief economist David Malpass, we underestimate growth because a larger share of investment is being expensed or depreciated. Thus, the value of firms’ investments isn’t accurately observed, and we actually have more capital than is reported.

Similarly, the Bureau of Labor Statistics has been underestimating jobs that are created in the economy, because it cannot accurately sample firms. Last month BLS added 754,000 jobs to correct data from April 2005 through March 2006.

To keep the economy growing, we need to prevent taxes from rising. Tax rate increases are built into law and will rise without new legislation. Bills enacted between 2001 and 2003 will expire in 2010; they include lower income tax rates, more business expensing, reduced capital gains rates, and reduced estate taxes.

The Alternative Minimum Tax taxes Americans at a rate of 26% or 28%, depending on income. According to a senior fellow at the Urban Institute, Leonard Burman, if Congress does nothing, the number of families subject to the AMT will rise to 23 million in 2007 and to 32 million in 2010 from 4 million in 2006.

Entrepreneurial activity in our economy may be the mainspring of economic growth and gains in employment. These entrepreneurs also need help. A report released this week by the Kauffman Foundation, based in Kansas City, found that entrepreneurs are impeded by four major obstacles — regulatory red tape, high costs of health care, burdensome litigation, and lack of skilled labor.

The first 100 hours of the new Congress are over, but Congress has yet to deal with major issues affecting economic growth and investor confidence. It is time to act — before investors face an even more serious decline in our stock markets.

Ms. Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute.