2008 Woodie Awards
Fed sees economic woes persisting into next year
JEANNINE AVERSA AP Economics Writer
Issue date: 11/20/08 Section: NEWS FROM AP
WASHINGTON (AP) - Pounded by a fierce financial crisis, the country is sinking deeper into economic despair and is likely to be in the hole well into next year, forcing more Americans into the ranks of the unemployed.
The gloomy outlook from the Federal Reserve came as hopes dimmed that Congress could secure a fresh $25 billion rescue package for the tottering U.S. auto industry before lawmakers quit for the year.
With economic troubles cutting into customers' appetites, businesses will remain in a cost-cutting mode, keeping layoffs high.
Although economists predict a government report out Thursday will show that the number of newly laid-off workers filing applications for unemployment benefits last week dipped to 505,000, that figure would still point to an ailing jobs market, they say.
In the prior week, new applications filed for jobless benefits zoomed to 516,000, the most since right after the September 2001 terror attacks.
Despite a flurry of bold government actions, including $700 billion financial bailout package now being rolled out by the Treasury Department, financial and economic problems rage on.
Treasury Secretary Henry Paulson - who is overseeing the rescue effort - will deliver an assessment of the economy in a speech Thursday in Simi Valley, Calif.
Paulson's outlook comes one day after the Federal Reserve dramatically lowered its projections for economic activity this year and next, and signaled that additional interest rate reductions may be needed to revive the economy.
Given all the worrisome economic news, Wall Street nosedived. The Dow Jones industrials on Wednesday lost 427 points, or about 5 percent, at 7,997 - its lowest close since March 2003.
To cushion Americans from all the fallout, many economists believe the Fed will ratchet down its key interest rate - now at 1 percent - by one-quarter or one-half percentage point on Dec. 16, the last session of the year for its policy-making committee.
The gloomy outlook from the Federal Reserve came as hopes dimmed that Congress could secure a fresh $25 billion rescue package for the tottering U.S. auto industry before lawmakers quit for the year.
With economic troubles cutting into customers' appetites, businesses will remain in a cost-cutting mode, keeping layoffs high.
Although economists predict a government report out Thursday will show that the number of newly laid-off workers filing applications for unemployment benefits last week dipped to 505,000, that figure would still point to an ailing jobs market, they say.
In the prior week, new applications filed for jobless benefits zoomed to 516,000, the most since right after the September 2001 terror attacks.
Despite a flurry of bold government actions, including $700 billion financial bailout package now being rolled out by the Treasury Department, financial and economic problems rage on.
Treasury Secretary Henry Paulson - who is overseeing the rescue effort - will deliver an assessment of the economy in a speech Thursday in Simi Valley, Calif.
Paulson's outlook comes one day after the Federal Reserve dramatically lowered its projections for economic activity this year and next, and signaled that additional interest rate reductions may be needed to revive the economy.
Given all the worrisome economic news, Wall Street nosedived. The Dow Jones industrials on Wednesday lost 427 points, or about 5 percent, at 7,997 - its lowest close since March 2003.
To cushion Americans from all the fallout, many economists believe the Fed will ratchet down its key interest rate - now at 1 percent - by one-quarter or one-half percentage point on Dec. 16, the last session of the year for its policy-making committee.
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