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Federal Reserve Chairman Ben Bernanke: US country's economic outlook has deteriorated and signaled that the central bank is ready to keep on lowering a key interest rate — as needed — to shore things up.

• Bernanke said the housing and credit crises has greatly strained the economy.
• Hiring has slowed: That is Employment has slowed down
  
• Economy is pinched by high energy prices
  
• Single biggest asset "HOMES"— weakened
  
• "The outlook for economy in recent months, and the downside risks to growth have increased,"
• "Our economy is clearly in trouble,"
• "Period of sluggish growth."
• "Important to recognize that downside risks to growth remain, including the possibilities that the housing market or the labor market may deteriorate to an extent beyond that currently anticipated or that credit will become even harder to secure."
• The troubles in the housing and credit markets threaten to push the economy into its first recession since 2001 — if it hasn't fallen into one already.
• "I believe our economy will continue to grow, although its pace in coming quarters will be slower than what we have seen in recent years,"

THE SUB PRIME EFFECT: WHAT IT IS: Mortgages — given to people with blemished credit histories or low incomes — and a reluctance by skittish lenders to make "jumbo" home loans exceeding $417,000 have aggravated problems in the housing market.Unsold homes have piled up and foreclosures have climbed to record highs.

The Fed "will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks,"
Additional rate cuts likely.

Steep run-up in oil prices is a reminder that the Fed can't let down its inflation guard: Inflation may increase.