After years of high interest rates, the Federal Reserve finally slashed its benchmark lending rate by half a percentage point in late September, according to CNN. Federal Reserve Chair Jerome Powell told reporters after the announcement that the cut was intended to keep the U.S. economy humming along in its current "good shape."
Powell isn't wrong when he says the economy is in good shape, but history suggests that Americans would still be wise to proceed with caution. Since 1990, the Fed has undertaken six cutting cycles, not including cuts that occurred during the pandemic. And the economy fell into a recession an average of 18 months after each of these cutting cycles began.
But not everyone sees a recession on the horizon. According to USA Today, some analysts believe that the rate cut may just provide more fuel for a stock market that still has room to climb.
Still, businesses and consumers alike will still benefit from lower borrowing costs, and while job growth has slowed, the economy and labor market remain strong. Ryan Detrick, chief market strategist at investment firm Carson Group, told USA Today that he's less concerned about a recession, and believes that the Fed chose to cut rates now to catch up after declining to implement any cuts in July.
