Wednesday, June 22, 2011

The Federal Reserve Sees a Mirage

The wonder of a mirage in the desert is how that glimmering shiny water it just out there out in front of you tantalizing. Well, the US Federal Reserve sees the American "recovery" as a mirage. Here is how their estimate of GDP growth keeps drifting further and further in the future while the current poor "growth" continues...

GDP projections of Federal Reserve Governors and Reserve Bank presidents
Change in Real GDP201120122013
Jan 2011 Projections3.4 to 3.93.5 to 4.43.7 to 4.6
April 2011 Projections3.1 to 3.33.5 to 4.23.5 to 4.3
June 2011 Projections2.7 to 2.93.3 to 3.73.5 to 4.2

And here are the unemployment projects that continue to be estimated to fall, but that fall in rates, like the mirage, keeps drifting further out.

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents
Unemployment Rate201120122013
Jan 2011 Projections8.8 to 9.07.6 to 8.16.8 to 7.2
April 2011 Projections8.4 to 8.77.6 to 7.96.8 to 7.2
June 2011 Projections8.6 to 8.97.8 to 8.27.0 to 7.5

More details on the Federal Reserve projections can be found here. And the official press release from the June 21-22 meeting can be found here.

Sadly, Obama see no "emergency" here. The fact that 14 million are unemployed doesn't worry him. He continues to believe that back in March 2009 he set the ship of state on a steady path to "economic recovery". The fact that it keeps drifting in eddies and side currants doesn't appear to have cracked through his self-confidence. It is good to have a leader with confidence. But a leader unwilling to face facts and adjust direction in the face of stubborn facts that don't fit the current interpretation is the sign of a willful and arrogant leader, not a wise leader.

No comments: