CHICAGO — With real estate markets sinking fast and the job market in low gear, critics of the Federal Reserve are warning that the central bank may have overtightened the nation's monetary spigot.

After 17 steps to squeeze the money supply over a period of two years, fears are growing that the Fed has dried up too much of the economy's activity, all in the name of choking off inflation.

Such fears aren't entirely unwarranted, because a half-dozen years ago a Fed stranglehold on money zapped the dot-com bubble. In short order, the economy tumbled into recession.

The Fed's latest comments, in its region-by-region beige book due out tomorrow, will offer clues about what comes next. Chicago economist William Hummer says that it will point to a slowdown that is just right.

"The report will talk about modest expansion, exactly in line with what the Fed wants," said Hummer, of Wayne Hummer Investments. "The good news is that there has been some deceleration in inflation pressures."

A drop in oil and gasoline prices is partly a result of central banks around the world crimping the growth of money, he said. That will benefit consumers.

Meanwhile, "the housing market has weakened, but there is no cause for gloom and doom," Hummer said. "These cycles take awhile."

On balance, according to Hummer, the Fed's comments will indicate that the central bank will stand pat on monetary policy, "with no need to rock the boat." That means interest rates will be unchanged when policymakers meet Sept. 20.

One reason the economy has held firm is that consumer spending remains solid. For months, Americans have been leaning on credit cards to shell out more money than they make.

But economist Peter Morici says that trend can't last indefinitely.

"With savings so low, higher interest rates, especially mortgage rates, could cause an abrupt change in consumer behavior," he says. "A sharp increase in savings could throw the economy into recession."

After a quarter in which corporate profits rose on average by more than 13 percent, the stock market begins September amid concerns that earnings momentum is slowing. Companies are hitting a speed bump that indicates profit growth is falling to single-digit levels for the first time in about three years.