The FOMC has lowered the GDP expectations for the current year as well as 2011.
- 2010 GDP 3.0-3.5% (3.2-3.7% prior)
- 2011 GDP 3.5-4.2% (3.4-4.5% prior)
- 2012 GDP 3.5-4.5% (3.5-4.5% prior)
With regard to the employment situation the FOMC has revised the unemployment rate forecast for the next three years. Not good news for those who were expecting a quick rebound.
Unemployment Rate:
- 2010 9.2-9.5% (9.1-9.5% prior)
- 2011 8.3-8.7% (8.1-8.5% prior)
- 2012 7.1-7.5% (6.6-7.5% prior)
Inflation expectations have also been reduced
PCE inflation:
- 2010 1.0-1.1% (1.2-1.5% prior)
- 2011 1.1-1.6% (1.1-1.9% prior)
- 2012 1.0-1.7% (1.2-2.0% prior)
- Core PCE:
- 2010 0.8-1.0% (0.9-1.2% prior)
- 2011 0.9-1.3% (1.0-1.5% prior)
- 2012 1.0-1.5% (1.2-1.6% prior)
The FOMC statement also mentions that additional stimulus spending may be required if the economic outlook continues to worsen.
More on this topic
(What's this?)
Is the Fed Happy with the Crappy Economy?
(naked capitalism, 7/9/10)
JIM GRANT SAYS THE FED KNOWS NOTHING
(THE PRAGMATIC CAPITALIST, 7/18/10)
Summer Rerun: The Fed: The Need for a Paradigm Shift
(naked capitalism, 7/25/10)
On another matter, the Fed policymakers continued to resist calls from lawmakers on Capitol Hill to reveal the identities of banks and other financial institutions that draw emergency loans and participate in other Fed credit programs. Fed policymakers said such disclosure would be viewed “as a sign of financial weakness” and that the “resulting stigma would undermine the effectiveness” of the programs, which are intended to promote financial stability and economic recovery.
