By Dr. Irwin Kellner, CBS MarketWatch.com

HEMPSTEAD, N.Y. (CBS.MW) -- Is the economy slowing down or speeding up? It's a close call.

Before trying to figure out where we're going, you have to agree on where we've been. And when it comes to the second quarter's gross domestic product, opinions are divided.

Some economists feel that economic growth picked up a tad during the second quarter. The CBS MarketWatch consensus thinks the GDP rose at an annual rate of 4.2 percent compared with 3.9 percent in the first. See Economic Forecasts.

I don't share this view. In my opinion, growth decelerated slightly in the second quarter, to an annual rate of 3.8 percent. Of course, we'll find out at the end of this month, when the Commerce Department releases its first look at the second quarter's GDP.

More important, however, is where the economy is going over the rest of this year. Current rates of growth will play a big role in shaping the electorate's thinking when people go to the polls, come November.

Economic growth could go either way - not just this quarter, but over the balance of this year as well. That's because there are a number of factors that are tugging at the economy from both sides.

On the positive side, employment growth has picked up so far this year - even with June's weak jobs report. More people at work means more money earned and, of course, more confidence to spend it.

Strong corporate profits are another plus (see my column of July 7). This gives business the funds with which to hire people and modernize or expand their facilities.

The housing market is another positive factor. Notwithstanding concerns over a housing bubble (see my column of June 30), residential construction and new and existing home sales all remain at high levels, boosting jobs as well as sales of building materials and household furnishings.

Having said this, there are a number of negative factors that are pulling the economy back.

First and foremost is inflation. By rising faster than incomes, prices are sapping buying power. Especially harmful is the earlier run up in energy costs, but the soaring cost of health care is also hurting many budgets.

Running a close second is rising interest rates. Long-term rates are up more than a point since March, while short-rates are inching their way up as well, cutting into people's ability to borrow and carry debt.

Besides a tightening of monetary policy, fiscal policy isn't helping the way it has in the past. There was no new tax cut this year, and the accelerated depreciation allowance that has boosted capital spending is set to expire at the end of this year.

The threat of another terrorist attack on U.S. soil in an effort to disrupt our upcoming elections, along with continued uncertainties abroad, is making many people nervous. This means less spending as well.

The next few months should determine which side wins the tug of war.

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