It was December 2007, and officials at the Federal Reserve were torn between two visions of what was in store for the nation's economy: a mild slowdown or outright recession.
They opted to believe in a slowdown. They were wrong.
Economists would later pinpoint that month as the official start of the Great Recession that wiped out nearly 9 million jobs and 40 percent of American households' wealth. But transcripts released Friday of the Federal Reserve's policymaking meetings in 2007 show officials were slow to abandon the optimism of the boom years even as a few officials began to sound the alarm.
That model of a slow-growth future restrained the Fed's earliest efforts to prop up increasingly tumultuous financial markets and created new divisions in an institution that for decades had been marked by strong consensus.
According to the transcripts, the word "recession" was not spoken until the summer. A staff presentation described a highly unlikely, worst-case scenario that included a 10 percent drop in the stock market. That still would not be enough to force the economy to contract, the staff assured senior Fed officials. Even later, officials were hesitant to deploy what one called "the r word."
Some worried that the Fed could worsen market panic by appearing overly concerned by the volatility.
Over the next year, the Fed cut its target interest rate an unprecedented seven times, bringing it close to zero for the first time in the central bank's nearly 100-year history. The next year, the financial crisis would be in full swing, economic output would plummet and the unemployment rate would skyrocket.