Ok, we are already way past the Federal Reserve's previous predictions of unemployment. Remember that? "Oh, unemployment won't hit 10%" according to Bernanke testimony. The unemployment rate is at 10.2%, U6 is 17.5% and growing.
So today we have more forecasts.
- Q4 2010 - 9.3% to 9.7%
- Q4 2011 - 8.2% to 8.6%
- Q4 2012 - 6.8% to 7.5%
Good god, can we get some real labor and jobs policy going that deals with the real facts of labor economics? These numbers imply we're going to destroy hundreds of thousands of middle class lives....permanently.
Most officials said it would take five or six years for growth, unemployment and inflation to return to levels consistent with the central bank’s goals, the minutes said. Some participants said it may take longer, according to the Fed.
5 OR 6 YEARS!!! Gets worse. Many Federal Reserve Staffers predict much worse numbers:
The decline in policy makers’ unemployment projections contrasted with the forecast of Fed staff economists, who increased their projection for the jobless rate “over the next several years,” the minutes said. The report didn’t specify the new staff projections; minutes of the previous meeting in September said staff economists projected a rate of 9.25 percent by the end of 2010 and about 8 percent by the end of 2011.
The Federal Reserve's U.S. GDP Forecast:
- 2010 - 2.5% to 3.5%
- 2011 - 3.4% to 4.5%
- 2012 - 3.5% to 4.8%
Does that seem too optimistic to you, given current labor, trade, incentives, tax policy?
Inflation is projected to be in the 1% range.
Yet at the same meeting, Fed Officials Said Low Rates May Fuel Speculation .
Federal Reserve officials said record-low interest rates might fuel “excessive” speculation in financial markets and possibly dislodge expectations for low inflation, according to minutes of their meeting released today.
“Members noted the possibility that some negative side effects might result from the maintenance of very low short-term interest rates for an extended period,” minutes of the Nov. 3-4 meeting said, “including the possibility that such a policy stance could lead to excessive risk-taking in financial markets or an unanchoring of inflation expectations.
What was that about the mother of all carry trades?
Meanwhile read this post, Rewarding Failure, on the top questions to ask Ben Bernanke during his confirmation hearing. May a diligent Senator literally read these questions from this blog and ask them. Why are we reconfirming the head of the Federal Reserve who got so much, so wrong and fights transparency to boot?