Some critics think the Fed is worrying too much about inflation, and too little about inadvertently tipping the nation into recession. Jasinowski hasn't got his wish, yet. On Tuesday, the Fed's Open Market Committee held interest rates unchanged. But in what's considered a signal that rate cuts are in the works in 2001, the committee said it now considers the risk of inflation to be outweighed by the chances that the economy will turn down sharply. That is a significant reversal of the committee's priorities over the previous 11 months, when inflation concerns were on the front burner.
Most observers consider a recession unlikely.
But braking the world's biggest economy is an inexact process. And in recent weeks, what had been a trickle of evidence that the rate hikes are taking hold turned into a torrent. As the effects of those hikes continue to spread next year, predicts economist Wesbury, the U.S. economy will grow at its feeblest rate in a decade. Although 2000 is ending with something of a whimper, its robust first half guarantees that the current year will show strong GDP growth of 3.9 percent or even 4.0 percent, Wesbury calculates. Not everyone sees such shaky prospects.