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Federal Reserve Announces Economy Is 'leveling Out'

Written by Ken Gaebler
Published: 8/12/2009

The Federal Reserve tentatively announced that the economy is starting to stabilize, indicating that recovery may be on the horizon.

The Federal Reserve had some encouraging news for small businesses this week, announcing that the economy is stabilizing and may be starting to turn around.

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In an announcement Wednesday, the Federal Open Market Committee said that "economic activity is leveling out" and that "conditions in financial markets have improved further in recent weeks," citing stabilized household spending and business inventories despite ongoing job losses, tightened credit and the depressed housing market.

"Although economic activity is likely to remain weak for a time, the committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability," the committee said.

The Reserve also announced that it will hold the target range for federal funds at zero percent to 0.25 percent, and will purchase $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of 2009. It will also buy $300 billion of Treasury securities.

Although the unemployment rate fell 0.1 point in July to hit 9.4 percent, the Labor Department announced this week that the rate may hit 10 percent before it begins to significantly drop, Reuters reported.

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