Is The Fed Out Of Bullets?

NEW YORK (CNNMoney.com) -- Economists are more nervous about the chances of another recession. And one of biggest fears is that the Federal Reserve may have run out of bullets to fight another downturn.

"They do have some ammunition left, but it's not going to pack a lot of punch," said Mark Zandi, chief economist with Moody's Economy.com.

Most economists aren't yet predicting that a double dip recession is imminent. But financial problems in Europe led to a sell-off in U.S. stocks in the past six weeks. Weaker-than-expected readings on job growth and retail sales have added to concerns that the recovery is stalling out.

"Whenever the next recession comes, it is very important that policymakers have had the opportunity to reload their gun to fight the downturn," said Lakshman Achuthan, managing director of Economic Cycle Research Institute. "Today it's not clear that there's a lot more policymakers can do."

The typical first step to spur a faltering economy is for the Fed to cut the cost of borrowing money in order to encourage spending.

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