Federal Reserve Leaves Fed Funds Rate Unchanged

As always the Federal Reserve released a policy statement. It said household spending "appears to be expanding but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit." In September the Fed said that spending as "stabilizing," a more pessimistic POV.

The Federal Reserve, while cautious about inflation, indicated that the recession had marked people with a cautiousness around spending. This would, the U.S. central bank said, mean that inflation will likely be kept under control.

It is true that not only is unemployment high, Americans have begun saving more. While a good thing, it's also a bad thing, as the rest of the world has grown accustomed to the U.S spending habits as America's contribution to the global economy. For example, consumer spending plummeted in September.

However, there have been positive signs nonetheless. The U.S. economy grew at a better-than-expected 3.5 percent annualized rate in the third quarter, which statistically signals the end of the downturn.

Also, on Tuesday, billionaire investor Warren Buffett said his company, Berkshire Hathaway Inc, agreed to purchase the nation's largest rail company, Burlington Northern, saying “It’s an all-in wager on the economic future of the United States. I love these bets.” Obviously, a very positive view on the economy.

Most analysts at have been expecting the Federal Reserve to keep interest rates on hold until mid-2010 or later.

Written by Michael Santo