Fed: Economy Darkens Heading Into Holidays

[Purveyor]

Source: Associated Press

(12-03) 11:05 PST WASHINGTON (AP) --

The country's economic picture has darkened further as Americans hunkered down heading into the holidays, forcing retailers to ring up fewer sales and factories to cut back on production.

The Federal Reserve's new snapshot of business conditions nationwide, released Wednesday, suggested the economy was sinking deeper into recession.

"Economic activity weakened across all Federal Reserve districts," the report concluded.

The Fed didn't use the word "recession," but just two days earlier the National Bureau of Economic Research declared what many Americans already knew in their bones: that the country had been suffering through one since last December.

To cushion the fallout, Federal Reserve Chairman Ben Bernanke said Monday that the central bank is prepared to lower its key interest rate and to explore other ways to revive economic activity. Many economists predict the Fed will cut its rate — now near a historic low of 1 percent — at its last scheduled meeting this year on Dec. 16.

With jobs vanishing, shoppers cut back, causing retail sales to be "weak" or "down" in most of the Fed's 12 regions.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/12/03/national/w110052S94.DTL

[justabob]

1. Question

How much difference will cutting the interest rate to zero really make? I do not know much about these things, but instinct tells me zero is not a very good place to be.

[ksimons]

3. well, in some ways it helps industries

sounds absurd but when their interest rates dropped, folks in Japan were investing in infrastructure, companies and real-goods because they actually gave a better rate of return - so industries built up for a time. better to earn 6 percent on a business than a lot less in a low yield fund.

[Winterblues]

2. Can Obama replace Bernanke or does he have to wait until his time is up?

This man is as bad or worse than Greenspan.. He needs to go ASAP.

[Purveyor]

4. Yes, the President can remove any member of the Federal Reserve Board of Governors...for cause.

US CODE: http://www.law.cornell.edu/uscode/html/uscode12/usc_sec_12_00000242----000-.html