Word: feds
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Dates: during 2000-2009
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...better than to play headline-grabbing forecaster in his speech to small business leaders in San Francisco. He limited his outlook for the recovery to another acknowledgement that economic indicators have gone from "unremittingly bad" to "increasingly mixed," and that "significant risks remain." (That much we got from the Fed last dose of boilerplate in December, although ambivalence-ridden stocks still sold into Friday's bell on the restatement...
...Fed influences consumers more than businesses
Classic recessions start with the Fed fearing inflation and aggressively raising interest rates to choke off excess business investment. They end with the Fed defeating the inflation foe and slowly cutting rates again. This one started with inflation practically nil and the Fed in neutral. With no inflation threat--indeed, with deflation the bigger worry in some camps--the Fed has been aggressively cutting rates. Those cuts are working to stimulate the economy, but not in the usual...
...Fed Chairman Alan Greenspan and company have chopped the benchmark federal funds rate 11 times this year, to 1.75%. In the last recession, the rate fell only to 3%. "This is unlike anything we've seen in the postwar period," says economist Stephen Roach at Morgan Stanley. Recessions that spring from manic business overbuilding, such as this one, were more common before World War II and proved then to be far more difficult to correct, lasting on average about twice as long as recessions caused by Fed rate hikes, Roach notes...
They have long known this on Wall Street, where year-end bonuses can make up almost all of annual compensation. But this is the first recession since flexible compensation took hold throughout the work force in the '90s. A Fed survey shows that 95% of companies now give a year-end bonus, stock options, profit sharing or commission payments--up from 65% five years ago. Many companies offer such flexible pay to employees well below top management, and typically this compensation falls in bad times...