Fed set to make pivotal announcement on US economy | CNN Business

It’s September 18 and the Federal Reserve is set to announce at 2 pm ET that it is cutting interest rates for the first time in a while.

That exact situation has actually happened before. On September 18, 2007, the Fed delivered a half-point rate cut to address turmoil in the housing market. The air was also rife with uncertainty over whether the Fed would roll out a quarter-point cut or slash rates by half a point — just like right now.

But, of course, the economy’s circumstances right now are a lot different than they were 17 years ago. The Fed’s September 2007 rate cut occurred a few months before the Great Recession, as new mortgages entering foreclosure began to climb and the job market also displayed concerning signs of weakness.

The situation right now isn’t as dire as it was back then. America’s housing market is struggling with an acute affordability crisis, but there isn’t a subprime mortgage problem that’s threatening the country’s financial system. And yes, the job market has slowed over the past year, but job growth remains healthy and unemployment is still at historically low levels. In July and August 2007, the US economy lost jobs for the first time in four years.

Stocks sky-rocketed after the Fed cut rates by half a point in September 2007, with the Dow up 2.5% and the S&P 500 rising by nearly 3%.