Here’s the money quote:
“Certainly, there are scenarios in which the unemployment rate might still be at a frustratingly high level and might not have moved much, in which still the overall conditions in the economy would justify beginning to tighten.”
-Dennis Lockhart, Atlanta Fed President.
To put that into some context:
“The U.S. economy will be slow to recover from the deepest recession since the 1930s as rising unemployment curbs consumer spending, Federal Reserve officials said.
San Francisco Fed Bank President Janet Yellen raised the prospect of a “jobless recovery” in a speech in Phoenix, while Dennis Lockhart, who heads the Atlanta Fed, predicted a “relatively subdued pace of growth” this quarter and beyond.
The comments yesterday are among the first on the economic outlook since the Fed signaled last week that a return to growth alone won’t be enough to change its policy of keeping interest rates near zero for “an extended period.” Instead, the central bank said any change would depend on increases in employment and inflation.”
The Fed obviously has no idea what comes next . . .
Source: Fed Officials Say Recovery Will Be Hampered by Unemployment Steve Matthews and Vivien Lou Chen
Bloomberg, Nov. 11 2009 http://www.bloomberg.com/apps/news?pid=20601087&sid=avesmJ.KupaM&pos=5
Originally published at The Big Picture and reproduced here with the author’s permission.