Economy

Fed Stimulus Not Working

Recovery slowed during latest round of debt buying.

The Federal Reserve's experimental attempt to boost the recovery by buying federal debt may have inflated the stock market, cut the cost of American exports, and lowered companies' interest rates—but it's failed to affect the larger economy, economists say. The latest estimates show the pace of the recovery lagging since November, when the Fed started buying $600 billion in Treasury securities. The Fed first decided to buy bonds in November 2008, when it purchased $1.7 trillion in mortgage and Treasury bonds in order to hold down mortgage rates and the cost of borrowing. When the economy lagged again last summer, Fed Chairman Ben Bernanke announced another round of purchases. This round is scheduled to end in June, and the Fed has yet to decide what to do next. Despite the criticism, Bernanke and his supporters have argued that the Fed's action prevented possible deflation.