This was a stupid thing for the Fed to do just to make Bush look good.
Once again, they never look at the long term effect, only the spin. Let's not let them spin this!!
The economy has not grown despite what you here. The economy will never grow under Trickle Down/Supply Side economics, it just builds pyramids.
Here are exerpts from the Bloomberg report on the rate drop.
Fed Cuts Discount Rate to 5.75% to Ease Credit Crunch (Correct)
By Scott Lanman and Brendan Murray
Aug. 17 (Bloomberg) -- The Federal Reserve unexpectedly cut its discount rate and said it's prepared to take further action to ``mitigate'' damage to the economy from the rout in global credit markets.
The central bank reduced the rate at which it makes direct loans to banks by 0.5 percentage point to 5.75 percent. Policy makers kept their benchmark federal funds rate target unchanged at 5.25 percent. It's the first reduction in borrowing costs between scheduled meetings of the Federal Open Market Committee since 2001 and Ben S. Bernanke's first as Fed chairman.
``Financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth going forward,'' the central bank's Federal Open Market Committee said in a statement released in Washington. ``The downside risks have increased appreciably.''
In the statement, the committee said it is ``prepared to act as needed to mitigate the adverse effects on the economy arising from disruptions in financial markets.''
The cut reflects alarm at the central bank that more restrictive lending conditions and volatility in financial markets will deepen the housing recession, weaken employment and erode economic growth. As recently as its Aug. 7 meeting, the FOMC kept rates unchanged and said inflation is still the biggest danger to the economy.
Should the Dow have been near 14,000, no way. It's a pyramid scheme.
Job Growth
Employers in the U.S. added a fewer-than-forecast 92,000 workers to payrolls last month and the jobless rate rose to 4.6 percent from 4.5 percent. Indexes tracking U.S. manufacturing and service industries also slowed more than expected in July, according to the Institute for Supply Management. Auto sales last month were at their lowest level in nine years.
``This is not a sign of balanced and healthy growth economy,'' Dhawan said.
GDP is up but because of the War and the Bush Tax Cuts and isn't it just adorable that we are Bankrupting the Treasury again, so, so what? The Reagan Bush Legacy will be one of Greed and Stupidity.
Gross domestic product expanded at an annual pace of 3.4 percent in the second quarter, up from 0.7 percent in the previous three months. Consumer spending, which kept the economy afloat for much of the past year, slowed. Growth was underpinned, instead, by exports and corporate investment.
Economists and policy makers anticipate a slower expansion in the second half. For the year, Fed governors and presidents expect growth, on average, of about 2.25 percent to 2.5 percent, Bernanke told Congress last month. The projections are about a quarter-point below the last round in February, mainly on weakness in homebuilding.