August 12th, 2009
02:40 PM ET
5 years ago

Fed sees a bottom

NEW YORK (CNNMoney.com) - The Federal Reserve said Wednesday it appears that the U.S. economy has halted the longest period of decline since the Great Depression, although it cautioned that economic activity is likely to remain weak in the near term.

The central bank left its key overnight interest rate at 0% to 0.25% range, as expected. Its statement at the conclusion of its two-day meeting said "economic activity is leveling out." That is its most bullish assessment of the economy in more than a year, and suggests that a recovery may have started.

It said that it still expects "inflation will remain subdued for some time" and said that it expects rates to remain near zero percent "for an extended period."

The Fed cut interest rates to the record low range at its December meeting in an effort to spur the struggling U.S. economy at that time.

It also pumped about $1 trillion of cash into the economy during the last year through a number of extraordinary programs, including the purchase of Treasurys and mortgage-backed securities, as well as new programs to get banks and other lenders to extend credit to consumers.

But in recent weeks there has been a growing consensus among top economists that the U.S. economy has turned around or is close to doing so. A number of economic readings, including the government's employment report and the gross domestic product, the broadest measure of the nation's economic activity, have improved - although they still show job losses and a modest drop in GDP.


Filed under: Economy
soundoff (54 Responses)
  1. RDS

    WOW...like forreal you mean to tell me that the economy is actually starting to get better. Boy oh boy what are the republicans going to say now. If all their 'free market' solutions were so great why didn't they keep us from going into one of the worst recessions near depression. I would like all of you to think back to a time in recent history when a Republican president left the economy in a good condition...Reagan, Nixon, Bush Sr. , Bush Jr (he!! I'll even give ya'll the dem Jimmy Carter). People are scared of gov't take overs. Name one financial collapse in this country that was caused by the gov't and not private industry..LOL DON'T WORRY I'LL WAIT!!

    August 12, 2009 03:22 pm at 3:22 pm |
  2. Sniffit

    I love being right.

    August 12, 2009 03:23 pm at 3:23 pm |
  3. anti liberal

    the fear over inflation is causing the fed to hold down these rates which are helping to cause the recession to last for a more prolonged period of time.

    yes Obama kept us from falling over the cliff, but he's NOT backup us up, turning us around and starting us going again, he's allowing us to hang over a cliff.

    August 12, 2009 03:25 pm at 3:25 pm |
  4. Jennie, MA

    Good, rack up one more succcess for President Obama. I knew I voted for the right person.

    August 12, 2009 03:25 pm at 3:25 pm |
  5. bsmith171

    the same people that got us into the mess and now saying they see an end.

    they are LYING so they can keep their miserable jobs.

    this is like that old scam artist alan greespan.
    next year interest rates will rise and we will have inflation due to the stupidity of Geithner, Summers, Emanuel, Axelrod and their pupprt Obama. yeah, him, the afformative action law student who has never held a job in management, executive of decision making basis.

    August 12, 2009 03:26 pm at 3:26 pm |
  6. Leanne, KY

    Oh gee, the Party of No is saying....NO. What else is new? These people ought to get a life and let the rest of us enjoy ours. See you later whiners, you make me sick.

    They say they hate the government until something happens to them, like the bottom falling out, then they moan and groan about the government not doing enough. They can't have it both ways. Grow up people.

    August 12, 2009 03:28 pm at 3:28 pm |
  7. growing consensus among top economists

    growing consensus among top citizens that a growing consensus among top economists isn't worth a plug nickle

    August 12, 2009 03:28 pm at 3:28 pm |
  8. geecee

    The money that was advanced to the banks under TARP (Bush was STILL President) and the money advanced under the Economic Recovery Package (in February – $787Billion) was advanced to be repaid when possible, particularly under the TARP. Banks have been giving money back. The auto industry which was saved from total collapse, is turning around slowly too. Jobs will come back, but they are the last to recover. It's going to take time. Things were pretty bad and we were going off a cliff. At least that has pulled back. But, don't rejoice too much! It might upset the Rethuglican Do Nothing Party!! Remember, they want Obama to fail even if it means the Country goes down. They are vindictive and hateful, so let's not bother them with any good news, regardless how slight, okay?

    August 12, 2009 03:28 pm at 3:28 pm |
  9. aware

    Great!

    It is the bottom for the arrogant, obfuscating, manipulative Obama! :)

    August 12, 2009 03:30 pm at 3:30 pm |
  10. Dutch/Bad Newz, VA

    When new jobs are created, how about not hiring any republicans since they opposed the stimulus. Just a thought. The nerve of Gov. Jindal signing stimulus checks with his name on them as if he supported the bill in the first place. The hypocracy of the GOP never dies.

    August 12, 2009 03:30 pm at 3:30 pm |
  11. DJ in the Silicon Forest

    OK, Feds, put your pom-poms down. We have NOT hit bottom! In fact, the freight train that will hit us hasn't even left the station! For those of you younger than say, 45 to 50 years old, you either weren't born or were too young to remember the disastrous policies of Jimmy Carter. I didn't vote for him (I was 16), but I believe he was a well meaning, but completely clueless and ineffectual leader. Fast forward to 2009 and what we have is even worse than Carter. Obama will make us WISH we had Carter in office!!

    August 12, 2009 03:32 pm at 3:32 pm |
  12. Randolph Carter the evil, narcissistic Obamabot

    I saw a bottom one time. It was on cable really late at night. Does that make me a bad person? Have a nice day!

    August 12, 2009 03:33 pm at 3:33 pm |
  13. S.B. Stein E.B. NJ

    Don't call it over until the unemployment rate starts to drop. That is a lagging indicator. Once it stars dropping, then we definately have a better indicator and confirmation that the recession is over.

    August 12, 2009 03:33 pm at 3:33 pm |
  14. ANGIE IN PA

    Carry on President Obama slowly we are digging ourselves out of the Hole that Bush and the Republicans dug slowly keep up the good work!

    August 12, 2009 03:34 pm at 3:34 pm |
  15. Chispter

    It took us 8 years to get into this hole and it will take a long time to get out of it. What amazes me is the "born again" deficit hawks. Suddenly, after nearly doubling the national debt over the last 8 years, these folks have seen the light. Now, they don't think we should invest any money in recovery efforts.

    Now, if we wanted to start a new, costly war, maybe they'd be down with that!

    August 12, 2009 03:34 pm at 3:34 pm |
  16. John

    Questions to Fed:

    1. How many Trillions, is our Trade Deficit?

    2. How much are we spending on Wars per Month?

    3. How many Billions are we importing from China?

    4. How many Billions of tax dollars are going towards unemployment? Why don't we create jobs rather than paying unemployment?

    5. How many Billions are we spending on import of Oil?

    6. How many Billions are we paying for Doctors and Nurses from other countries on H1 Visa?

    7. How many Billions have we given to Defunct and Useless Banks and Insurance Companies in Bail Out Money? and How much have they paid back in Interest and annuity?

    August 12, 2009 03:36 pm at 3:36 pm |
  17. ironmen1987

    Glad to see the Dems and Obama bashers still at it.....Meanwhile would somebody please stop saying the economy is improving long enough to tell the unemployed middle class dad how to save his house and feed his family ? What will the auto industry do 6 months from now when the "clunkers" are gone ? Another bailout ? What about all the people being lured back into the market ? We going to bail them out after they implode ? Sure hope Santa doesn't do a credit check this year.......

    August 12, 2009 03:38 pm at 3:38 pm |
  18. Henry Thoreau

    I don't mean to be juvenile, but a third-grader would giggle at the phrasing of this headline.

    August 12, 2009 03:41 pm at 3:41 pm |
  19. Fed Up

    Unemployment is dropping...................more peoples benefits have expired and they are no longer collecting it. That would be considered a positive sign by this administration.

    August 12, 2009 03:41 pm at 3:41 pm |
  20. joe

    Anyone that has taken a basic introductory course to economics understands that this was expected and inevitable, but is it sustainable? This administration is racking up trillions in debt and if you look at the treasury auctions, demand is drying up. The Fed will continue to buy bonds until the fall and once that is over, interest rates will sky rocket. Does anyone realize that this is just stealing from Peter to pay Paul. The Stimulus has failed (is anyone reading this working on a stimulus created project?), where are the green jobs? All we have done is set ourselves up for huge inflation. Yes, some things may have bottomed, but the economy is far from sound. And now he wants to spend trillions overhauling a health care system most Americans are happy with – can anyone say "super inflation"!

    August 12, 2009 03:42 pm at 3:42 pm |
  21. demwit

    10% unemployment, and rising
    80% debt to GDP, and rising
    Government ownership at an all time high, and rising

    MISSION ACCOMPLISHED!!

    August 12, 2009 03:42 pm at 3:42 pm |
  22. Sea.gem

    Stilulus has NOTHING to do with this...economists predicted this turn-around before the election last year ("Economy will bottom out and turn around between third and fourth quarter of 2009")...do your homework...Obama used economic fear for the election on the economy and now health reform...but his sucker bets have run out...people are seeing throughhis side show!

    August 12, 2009 03:43 pm at 3:43 pm |
  23. Jefe

    Just imagine – without the Federal Reserve system of privately-owned banks, we would still be using real money, we'd be inflation-free, and our nation wouldn't effectively held hostage by a bunch of private bankers.

    The president needs to nationalize the federal reserve immediately. Unconstitutional from the start, and meant to subverse our nation. The average terrorist has more love for the United States of America than does the so-called Federal Reserve.

    August 12, 2009 03:45 pm at 3:45 pm |
  24. Larry B

    The passengers on the Titantic all saw a bottom as well. Somehoe this does not comfort me

    August 12, 2009 03:45 pm at 3:45 pm |
  25. RealityKing

    Its a false bottom, unless Obama continues his trillion dollar deficit spending. Can you say double dip recession??

    Odd how CNN isn't ranting on about it the way they did in 2002. Well.., not really that odd when political bias is added into the equation.

    August 12, 2009 03:52 pm at 3:52 pm |
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