Federal Reserve chairman Ben Bernanke has decided to state the obvious today… the U.S. economy is going through a tough time. Is this the same Bernanke that has been saying all year that the subprime mortgage crisis has been contained?
Well, thanks for confirming what most of us already knew… record high oil prices and the severe housing slump are going to weigh on the American economy, and that an economic slowdown is on the way. The Federal Chief gave no signal though whether or not we can expect to see more interest rate cuts at the Fed’s next meeting.
The Fed finds itself in a tough situation right now. The stock market has been poor because of the weak financial sector and the problems coming out of the mortgage crisis. In order to help the market get back on track the Fed will typically lower interest rates, but at this point in time the Fed may not be able to lower them too much more because of the fear of inflation and pushing oil prices even higher than they currently are.
With oil testing the psychological $100 barrier, many experts are also starting to wonder just how hard an impact these rising energy costs will be felt by corporate America.
Definitely some tough times ahead, and on top of it all the dollar continues to trade at all time lows against the euro. Yes, Bernanke, the economy is in danger of a dreaded recession… it is time to figure out what to do and do it now, assuming that you haven’t waited too long as it is!
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