The Federal Open Market Committee announced after its August 12 meeting that it believes that “economic activity is leveling out”–presumable that means the free fall is abating. But the Committee’s announcement went on to say that “Household spending has continued to show signs of stabilizing but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment and staffing but are making progress in bringing inventory stocks into better alignment with sales.”
Continue previously announced quantitative easing measures including ongoing purchases of “up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve is in the process of buying $300 billion of Treasury securities.” However, the Fed will slow the pace of these purchases, and believes that they will be completed by the end of October.