Feds See A Bleak U.S. Recovery


Bernanke is leaving, the Feds darken their outlook on the U.S. economy but no changes for now. Changing the already near zero interest rates will cause even more inflation than there is now. Someone tell the President that we need certainty which will include loosening regulations, lowering the capital gains rate, and repealing the obviously disastrous healthcare bill.

WSJ – Federal Reserve officials see the U.S. economy settling into a disappointingly weak recovery this year and next, and say they have done all they are prepared to do to spur growth for now.

The bleak picture contrasts with the booming global economy, which is complicating the decision making of the Fed, but lifting the fortunes of U.S. companies abroad.

The central bank’s policy makers substantially downgraded their projections for U.S. economic growth and unemployment, which they released Wednesday after a two-day meeting. “We don’t have a precise read on why this slower pace of growth is persisting,” Federal Reserve chairman Ben Bernanke said in a dreary press conference following the policy meeting. “Maybe some of the headwinds that had been concerning us—like weakness in the financial sector, problems in the housing sector, balance sheet and deleveraging issues—some of these headwinds may be strong or more persistent than we had thought.”

Federal Reserve chairman Ben Bernanke says that despite providing guidance on short-term interest rates, the Fed has not made a similar commitment to its securities holdings. Courtesy Fox News. (Photo: AP Photo.)

In normal times, the Fed might consider cutting short-term interest rates during an economic slowdown. But it doesn’t want to risk causing more inflation, and besides, short-term rates are already near zero. The Fed said it expected rates to stay put for at least several more months. The $600 billion bond buying program started by the Fed last year will end as scheduled by month’s end…Read here: WSJ

Read about the CBO projections: We Will Be Greece