Nightly News   |  December 18, 2013

Fed to wean off stimulus spending

In the short-term, rates may go up on mortgages, credit cards, car loans and student loans -- but in the long-term, it remains to be seen if the rates will continue to rise. CNBC’s Sue Herrera reports.

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This content comes from Closed Captioning that was broadcast along with this program.

>>> it's been almost five years now since the official end of the great recession. the lingering question has been is the economy now strong enough to grow on its own without help from the federal reserve ? well, today the fed said it is finally ready to start pulling back on what's known as the stimulus, injecting money into the system, in effect. wall street liked the news. dow and s&p were at record highs. dow soared nearly 300 points, nasdaq up 46. what about american families? sue herrerra is with us from cnbc global headquarters. how will people feel this initially?

>> reporter: i think initially we may see interest rates go up a little bit, brian, as the fed takes some of the money out of the system. interest rates on things like credit cards and mortgages. eventually maybe student loans as well. credit cards tend to be the highest interest rate vehicle most americans carry. they tend to move interest rates higher at the first possibility really.

>> now a loaded question here. what does this do to address the income gap , the americans who have stopped looking for work, the jobs that have gone away, the salaries that never caught up?

>> reporter: a lot of people on wall street think perhaps the fed was premature, that the economy -- as wall street sees it and as washington sees its -- may look pretty healthy or healthier than before. if you're on main street , it's very iffy. we have a record number of people unemployed. we have people who have been looking for work for so long that they are now discouraged and they stopped looking for work. we all know people working several jobs, probably low paying jobs just to try to make ends meet. so i think perhaps this is a little premature by the fed, but the fed made it very clear if the economy starts to wobble again they will come back in with some of the money to prop it back up.

>> sue herrerra of cnbc global headquarters tonight. thanks as always.