The FED has the Tools?

Good Morning,
I hope your September is off to a great start! The media continues to focus on the debate of our economy heading into a double dip (a second decline in GDP immediately following a short recovery) and/or into a period of deflation. As I read several articles by different sources one central theme becomes clear. It seems the majority of economists and the Federal Reserve feel at this point a double dip is unlikely. One factor that is fueling the media storm is the mixed bag of economic reports and the fact that the FED has needed to revise GDP growth numbers down. However, it is important to note that we are still growing; just not the rate that was forecasted. Second quarter growth was revised down to 1.6% from the forecasted 2.4% As we move into the last part of 2010 there is a large potential for more volatility in both the equity and stock markets. The FED is also committed to using any means necessary to keep the recovery going (see attached.) This volatility will largely be driven by investors trying to get a read on where we are headed. Bottom line is we are growing; American’s personal savings rate is north of 6% and most companies are sitting on sizable cash reserves. Hopefully we will see some of this cash spent in the market to further fuel the recovery.
I am also hopeful rates will continue to remain at records lows to the end of the year. This will give incentive for first time buyers to enter the market and also allow all buyers to qualify for larger purchases. We have also seen some major underwriting guidelines get released in the past several weeks. Please let me know if I can be of service.
Damian
Current Rates:
Fed ready to take 'unconventional measures'
By Hibah Yousuf, staff reporterAugust 27, 2010: 12:43 PM ET
NEW YORK (CNNMoney.com) -- Federal Reserve chairman Ben Bernanke bluntly acknowledged that the U.S. economic recovery has lost considerable steam, but said the central bank has the necessary policy tools to support continued growth.
"The issue at this stage is not whether we have the tools to help support economic activity and guard against inflation," Bernanke said at the Fed annual symposium in Jackson Hole, Wyo. "We do."
Source: http://money.cnn.com/2010/08/27/news/economy/Bernanke_speech/index.htm