The Federal Reserve recently said that more rate cuts might be necessary to fend off further problems in 2008. After having cut interest rates by 1.25% in the past month, the Fed's outlook on 2008 became a bit gloomier after a Labor Department report estimated than unemployment rates were going up about 0.5% compared to last year.
Interest rate cuts and unemployment aren't the only problems for the Fed in 2008. With housing prices steeply declining and the possibility for a recession growing, the Fed can now only hope for the best. Insiders also believe that another 0.25% rate cut is coming next March when the Fed meets to discuss their outlook on 2008.
Will the U.S. economy fall into a recession? Why or why not? Will inflation become a problem for the economy in the coming months? Why or why not?
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