Post-Storm Rate Cut Not a Given

The Washington Times (Washington, DC), September 23, 2005 | Go to article overview

Post-Storm Rate Cut Not a Given


Byline: Henry Savage, SPECIAL TO THE WASHINGTON TIMES

Disasters always have some economic effect that may or may not influence lending rates. Hurricane Katrina and the September 11 attacks - two of the nation's most recent and most profound catastrophic events - are no different.

After the September 11 attacks, the Federal Reserve Board made it clear that it would use whatever powers necessary to assuage its economic damage. In fact, the Fed reduced short-term interest rates four times in the three months after the attacks, cutting the federal funds rate in half, from 3.50 percent to 1.75 percent.

The moves helped spur a sharp drop in mortgage rates, creating a housing and refinancing boom. The effects of these are felt to this day.

After Katrina hit, the Fed has remained silent, even though the potential detrimental economic side effects of Katrina could be far worse than September 11.

Why?

After some research, I now understand why the Fed has not jumped to lower rates in the Katrina's aftermath. Let's compare the two events.

When the terrorists attacked, the U.S. economy was already close to recession levels. Annualized growth in the third quarter of 2001 was less than 1.5 percent. This compares to a healthy 3.5 percent level in 2005.

Healthy growth numbers might be good for wages and employment, but they can also bring about inflation, and Fed Chairman Alan Greenspan is not about to lower rates if it will risk inflation.

But what about the job loss created by Katrina? The forecast is currently running in the 400,000 range. Surely such a hit in the job market won't overheat the economy.

Some experts say otherwise.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Post-Storm Rate Cut Not a Given
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.