They're not saying that anymore. Instead, shell-shocked investors are wondering whether the Fed has lost its power to speed things up. If the Fed's rate cuts perform as they have in the past, the steady reduction in rates will eventually work throughout the economy to boost consumer and business borrowing. Businesses will find it easier and cheaper to raise money, and consumers will find lower rates for car loans, mortgages and even some credit cards. Greenspan has said repeatedly this year that consumer confidence is the economy's last firewall against a recession.
Officials can only hope that their bold moves look good to wary shoppers.
That's evidence that consumers pay attention to Greenspan. Curtin said he thinks the Fed's rate cuts will help prop up confidence as the year unfolds. Psychological impact Federal Reserve Chairman Alan Greenspan is trying to reassure consumers. If investors believe that the Fed is serious about circumventing recession, they may not buy stocks, but certainly they'll stop selling them, and that's the first step toward stabilizing business and consumer confidence. Even with the Fed on the case, though, some economists worry that some of what is ailing the economy may be beyond the Fed's immediate ability to fix.