Capital Markets: Observations and Insights Autumn 2019

​ The Good, the Bad, and the Ugly

ECONOMY

The Ugly – Thinking About the Next Recession

• When the next recession eventually comes, will the Federal Reserve have enough ammunition to stimulate the economy? ‒ Experience in Japan and Europe has shown that it is difficult to stimulate economies with interest rates around the zero bound

Cut in Federal Funds Rate Around U.S. Recessions

8%

7%

Does the Fed have enough firepower?

6%

5%

4%

3%

2%

1%

0%

1989-1992 2001-2003 2007-2008

??

Source: FactSet and Alger.

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