Brigid Doherty, an entrepreneur in Arlington, Va., decided to hold off on plans to launch a personal errands business, hiring four or five entry-level employees, as she watched her investments dwindling with the stock market's slide. That's why I changed my whole business plan. To be sure, some experts remain confident. Leading economists such as Paul Krugman of the Massachusetts Institute of Technology cite the Fed's previous successes as proof that it can maneuver another soft landing. Because the economy has changed so much in recent years, Schlesinger believes, the Fed's ability to steer with time-honored methods such as rate cuts might not work as it has in the past.
Investors also are wary.
They initially rallied after the Fed's rate cut announcement this month, but then settled back into a funk. Marvin Kosters, an economist with the American Enterprise Institute in Washington, said it's possible the economy has already passed the soft-landing stage. To ensure a soft landing, he said, the Fed probably should have acted even sooner to cut rates.