Smith Faculty Opinion Article	October 2007
By Dr. John A. Haslem, Professor Emeritus E-MAIL WEB SITE

The 30 Seconds Outlook
October 1, 2007

Economists forecasting skill is about as good as guessing. William Sherden, in the Wall Street Journal, July 3, 1997.

With the 50 basis points reduction in the Fed funds rate, the Fed signaled strongly that for now recession, not inflation, is the primary worry. What some considered a delayed response was motivated to avoid rewarding speculators. But, with turmoil in the credit markets and employment data worrisome, the Fed felt compelled to cut rates decisively. More rate cuts may well follow with the peak in mortgage defaults yet ahead. Once market liquidity has been restored and fears of recession have faded, inflation will again be the focus.

by John A. Haslem

John A. Haslem, Professor Emeritus of Finance, University of Maryland.