Hit The Skids
-- January 15, 2003
The Federal Reserve, which slashed rates by 50 basis points in November in order to boost the economy out of its "soft patch," is admitting that the rate cuts haven't done their job. We told you when the Fed made its move that it would be futile.
Look. There is a reason why the National Bureau of Economic Research (NBER) hasn't been able to officially declare an end to the recession -- it's still ONGOING. The economy has been in a slump since March 2001.
Or to look at it another way, this current "soft patch" may be the start of yet another recession altogether. After all, it has now lasted for two months (according to the Fed's timeline) without any indication that the economy is recovering. For instance, consumer spending remains dismal; unemployment remains high; and corporate forecasts on earnings remain highly in doubt.
The Fed needs to face facts. It's not a "soft patch." The economy has hit the skids.
related article: Economy's 'Soft Patch' Runs Into Jan.