Pessimistic Fed to slash growth forecasts

Financial Times ^ | 11/21/2010 | Robin Harding

[Freedom56v2]

The US Federal Reserve will slash its growth forecasts and predict higher unemployment when it releases updated economic projections this week.

The Fed will release the latest forecasts made by members of its rate-setting open market committee on Tuesday, alongside the minutes of their November meeting, giving a complete picture of why they launched a new $600bn round of asset purchases.

The revised forecasts will show how the Fed became much more pessimistic over the summer and also highlight fears among a few members of the FOMC that some of today’s 9.6 per cent unemployment rate is structural and will take years to cure.

[Freedom56v2]

So much for being on the right track or moving in the right direction....Of course the 600bn in asset purchases will likely multiply to a lot more as banks can lend on the reserve....

Got milk? No. Got inflation? Likely.

[qwertypie]

All that BS about recovery last year was laughable. Deflation was still underway. QE was an admission that things were getting desperate, and the Fed/Bernanke played politics by trying to juice the markets just before the election. Had the stock market not made that rise in the fall, about 25 more House seats would have become GOP and Harry Reid would have lost.

QE was a hail mary pass that will eventually fail anyway.

[dennisw]

Since the economy stinks for people in the private sector does this mean the ManGods who work for Federal Reserve will get salaries and benefits cut say 10%. Or do they just make their Zeus like pronouncements from on high, completely above the mundane circumstances of us mere mortals?

The Fed “earns” about 40 billion per year these days. All is rebated back to the US Treasury except for about 6 billion to fund Fed operations and their bloated salaries/benefits.

Why should a Central Banker suffer just because you and your family are eating s*** ?

[The Comedian]

Now that the Republicans have won the House and most governorships and state legislature positions, it's OK to say how crappy the economy is.

What a charade.

Frowning takes 68 muscles.
Smiling takes 6.
Pulling this trigger takes 2.
I'm lazy.

[b4its2late]

Makes you want to say “DUH!”

[Southack]

Exactly. The optimistic forecasts were politically motivated; behind the scenes the Fed knew that deflation was savaging employment, hence the cries for QE2.

With the election over, the Fed now must show evidence to explain QE2, lest Congress take action against the Fed.

Suddenly, the real economic picture begins to emerge as the Fed releases this information. And release it the Fed must...because without it there is no justification for the new $600 Billion juicing.