Recession spurred by meltdown in the sub-prime mortgage business has become a real possibility to many economists in the last week or two, and it's widely believed that the fed will move to lower interest rates when it meets later today. Among those who stand to gain are people with sub-prime loans. Nick Raich is Director of Research at National City's Private Client Group.
Nick Raich: Potentially - it doesn't have to mean - but a rate cut could mean lower interest rates, particularly for these adjustable rate mortgages that are getting reset. So it could make it less painful.
But not for everyone, Raich says - it depends on the terms of your loan. Beyond that, Raich believes that recession is indeed likely - the question is will it happen now or later, and how severe will it be? He says the threat of recession due to sub-prime loan failures has trumped worries about inflation, and puts the probability that the fed will act today at 98 percent.
Bill Rice, 90.3.