Our Federal Reserve’s main duty is to monitor our fiscal and monetary policies. When the Federal Reserve lowers the interest rate in a recession or a weak economy in an effort to try and stimulate economic growth. Thus, on November 6, 2002, Alan Greenspan has, as the Chairman of the Federal Reserve Board, lowered interest rates an additional 0.5%, bringing it to a benchmarking 1.25% short-term interest rate, the lowest its been since 1961 (Berry par 2). As a result of the surprising half point decrease, the Dow Jones Industrial Average finished up 92.74 points at 8771.01. The broader S&P 500 climbed 8.37 to 923.76. The tech-heavy Nasdaq rose 17.82 to 1418.99 (Osbourne par 1). Already posing a positive impact on the stock market, it

It has been argued that consumer confidence is at a nine year low which may signal a decline in economic vitality. Though this may be true, one cannot completely rely consumer confidence to explain changes in economic movement. The increase in economic productivity in the last quarter disproves this notion. The problem with consumer confidence is that simple correlation does not signify causation. In an economic system as dynamic and complex as that of the US, various other factors must be taken into account before concluding any particular economic state. Thus, to say that the nation is seeping into a recession because of consumer confidence is falsified as the third quarter GDP proves.

is projected that the rate cut will stimulate the economy and boast consumer confidence. The lower rate only applies to short-term loans and leaves long-term mortgages, 15 years and above, alone. Although the Federal Reserve already believes that the current interest rate is more than enough to stimulate the economy, they decided to lower it an additional half a percent, helping to bring some relief to companies on short term loans. By lowering costs, companies are able to reap in higher profits. Higher p

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