Economic Woes Point to Fed Rate Cut

A run of bad economic news last week and a disappointing report on factory orders likely this week have U.S. economists all but certain that Alan Greenspan and the Federal Reserve will lower borrowing costs Wednesday to rescue a recovery in peril of grinding to a halt.

“The economy’s stalled,” said economist Mark Zandi of Economy.com in West Chester, Pa.

Reports Friday showing a drop in the number of jobs in October for the second straight month and reduced activity on factory floors cemented a virtual consensus the Fed would cut rates for the first time this year to stimulate activity.

Today the Commerce Department is expected to report that factory orders declined 3% in September.

The U.S. central bank’s policymaking Federal Open Market Committee, which has kept the federal funds rate at a four-decade low of 1.75% this year, is widely expected to agree on a reduction.

On Tuesday, the Institute of Supply Management will release its non-manufacturing index. On Thursday, the Labor Department will report on third-quarter productivity and on consumer credit in September.