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Fed leaders: Economic recovery slower than expected

By Neil Irwin
Federal Reserve leaders marked down their expectations for growth and inflation last month, concluding that the economic recovery is proceeding more slowly than they had thought in the spring but that the slowdown did not warrant new policy actions.

But Fed leaders did agree to explore options for supporting the economy further in case conditions worsen.

"The changes to the outlook were viewed as relatively modest and as not warranting policy accommodation beyond that already in place," said minutes of the Fed's June 22-23 policy meeting, released along with revised economic forecasts. "However, members noted that in addition to continuing to develop and test instruments to exit from the period of unusually accommodative monetary policy, the Committee would need to consider whether further policy might become appropriate if the outlook were to worsen appreciably."

In forecasts made in advance of the meeting and released Wednesday, the officials expected that gross domestic product will grow 3 to 3.5 percent this year, compared with a forecast of 3.2 to 3.7 percent at their April meeting. They modestly downgraded their projection for 2011 as well. That lower growth could translate into unemployment staying higher for longer -- Fed leaders expect the jobless rate to be 9.2 to 9.5 percent in the fourth quarter of 2010, and to be 8.3 to 8.7 percent at the end of 2011, both slightly higher than in April forecasts.

But they see little threat from inflation, projecting that prices will rise 1 to 1.1 percent this year, compared with the 1.2 to 1.5 percent rate they forecast in April. The new outlook is well below the 1.7 to 2 percent inflation rate that the Fed targets over the longer term.

The forecasts are the most explicit confirmation to date that Fed officials have lowered their expectations for growth -- and since their meeting three weeks ago, more weak economic data have been released suggesting a deceleration in the economy, including a reports on June employment conditions, international trade in May and retail sales in June.

Still, the minutes make clear that Fed leaders still anticipate a continued economic recovery, suggesting that most of the policymakers would still resist any push to take new steps to support growth. Members of the policymaking committee "generally saw the incoming data and information received from business contacts as consistent with a continued, moderate recovery in economic activity," the minutes said.

The minutes did note that "financial markets had become somewhat less supportive of economic growth," mainly due to troubles in Europe, and that this was "likely to weigh to some degree on household and business spending over coming quarters."

But the officials appear to place greater weight on data suggesting strength in the business sector. They noted that investment in equipment and software was rising rapidly, and that household spending "continued to advance," even as the weak job market could weigh on consumers.

As The Post reported last week, Fed leaders are starting to discuss policies that they might use to further support growth if the economy continues to weaken, including pledging to keep interest rates low for even longer than now expected, cutting the interest rate on banks' reserves and buying some additional mortgage securities.

By Ariana Eunjung Cha  |  July 14, 2010; 2:00 PM ET
Categories:  Federal Reserve , U.S. Economy  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   StumbleUpon   Technorati   Google Buzz   Previous: Second-quarter growth is looking crummy
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That's what a hailstorm of pessimistic thunder will do to a recovering economy. If all politicians had cooperated, and American Chamber of Commerce, instead of their steady beat of fearmongering, we'd be well beyond this mess by now. Instead they chose self over country. I will remember that on election day.

Posted by: beaone | July 14, 2010 4:14 PM | Report abuse

It is not a "slow recovery" nor a "sluggish recovery". The economy is in a continual, slow decline with no end in sight.

Miserable failure Obama

Posted by: screwjob17 | July 14, 2010 4:35 PM | Report abuse

Now that is just sad.

Posted by: Anonymous | July 14, 2010 4:43 PM | Report abuse

Expect the economy to continue to worsen, and once the Bush Tax cuts expire 1/01/11, the value added taxes get layered on, and the costs from new health care legislation (socialized medicine) kick in .... at that point there will be (once again) less disposable income for consumers to spend and the economic death spiral will continue on (until one day a more pro-business administration begins to oversee and guide things)

Posted by: Anonymous | July 14, 2010 4:50 PM | Report abuse

The average American is saving, not spending; home values have dropped, in many areas, by over 40%. Prices are up in the grocery stores; property taxes are going up to pay for bloated payrolls and pensions in Government, at all levels; true U6 unemployment is over 20%; more taxation and regulation to come; double foreclosures and bankruptcies still to come.

No end in sight except the death of the middle class and the American Dream. Shame; we once had a great country until all the politicians caught the corrupt virus.

Posted by: apberusdisvet | July 14, 2010 4:53 PM | Report abuse

They can slither and slime all they want to, PREPPERS DEPRESSION will not fund this FED with a dime extra moving in the economy to tax .
They have to shrink.
Starting with their own salaries and include ending their retirement plans seems a good place to start.
They did it for us, they can do it to themslves.

Posted by: dottydo | July 14, 2010 4:53 PM | Report abuse

This is another LIBERAL LIE and it's a WHOPPER.

The klutz from Kenya is killing the economy.

He and the Democrats are destroying our nation.

Posted by: Jerzy | July 14, 2010 4:56 PM | Report abuse

There is NO RECOVERY - Millions more unemployed since the pork laden stimulus was passed.

Hundreds of thousands of forecloures since the stimulus passed.

The only ones making money are the banks and Wall Street because they get 0% loans from the FED to play the stock market.

Remember, this is Obama's "Summer of Recovery Tour", so they have to lie like a rug and pretend that American is not bankrupt. Well how can we be bankrupt when Bernanke is burning the midnight oil to crank out those new dollars bills.

Obama is so desperate that he's actually talking to business people to get their ideas about creating jobs. Not that he's going to takE their adVice, but you have to admit it's a good "photo-op".


Posted by: Anonymous | July 14, 2010 4:58 PM | Report abuse

The One is failing.

Posted by: Anonymous | July 14, 2010 4:59 PM | Report abuse

Why do they call it the "Federal" Reserve, anyway? It's a private bank out in place to fleece America. There's not much "federal" about it, except the name. Before long, every penny of taxes collected will go to pay tribute to the families who control the member banks.

Posted by: Anonymous | July 14, 2010 5:15 PM | Report abuse

I see insanity from the right is fresh as ever. First, this report is from the FED, not Obama. And yes the recovery is occurring. It would proceed faster if the stimulus has been as large as the one Reagan did.

Posted by: Anonymous | July 14, 2010 5:16 PM | Report abuse

The economy was losing 500,000 jobs per month in 2008.

U.S. GDP grew in each of the last 3 quarters. Some declared the stimulus a failure, when they did not see instant results. The fact is jobs are always lagging the numbers recovery in each recession --

Balkingpoints / www

Posted by: RField7 | July 14, 2010 5:18 PM | Report abuse

Just using the word "recovery"is extremely deceitful.Bunch of arses.

Posted by: votingrevolution | July 14, 2010 5:20 PM | Report abuse


Posted by: Anonymous | July 14, 2010 5:20 PM | Report abuse



Posted by: Anonymous | July 14, 2010 5:29 PM | Report abuse

What we need here is an undeniable example can do ! Everything else will then simply fall into place as a result. So let's see it.

Posted by: jralger | July 14, 2010 5:50 PM | Report abuse

I most sincerely hope that the Nov. election proves to be a blood bath for the Democrats. May the likes of Charlie Rangel, Nancy Pelosi rot in the lower parts of the earth.
May the Patty Murray's of the world begin to tremble in fear of Nov.

Posted by: richard36 | July 14, 2010 5:55 PM | Report abuse

I don,t know how much longer it,s going to take to open our eyes to the economic standstill. Its at the pump stupid. That is the block for economic progress and big oil is controlling the moves. Regulate the petroleum industry and the economey will improve dramatically in two weeks. After that send the Southern Confederacy packing from DC. The Civil War is over!!!

Posted by: winston707 | July 14, 2010 5:59 PM | Report abuse

Wait until the state stimulus money runs out. Republicans will block even modest extensions just like they have with unemployment extensions.

The only sector that is going to do well will be the banking industry. I see the stock market getting up to around 11,500 somewhere in August before around 3000 of the super rich dump and it goes back under 9,000 and possibly down to 8,000 before they buy it back - again. The losers will be the 401ks and pensions - again. Republican will push for a capital gains cut (to create jobs you know) and receive huge campaign contributions for November.

Posted by: timothy2me | July 14, 2010 6:19 PM | Report abuse

There is NOT NOW nor was there EVER a RECOVERY.

The Post-Toasties and other WALL STREET Mouth Pieces such as CNBC, continue the BIG LIE.

The GOVERNMENT, with YOUR MONEY, is and has been the reason for the so called recovery in the first place. $12 TRILLION dollars since October 2008 through TARP/TALF and a dozen other worthless Bank Bail Out Programs. That does NOT include the GM/Chrysler bail out.

As soon as the HomeBuyer Tax credit ended, so did the uptick in Washington Real Estate. No Tax credit, NO BUYERS. Good bye RE.

So, read these and other pump and dump made for the SHEEP hack pieces with CAUTION! The press is just as much a part of the system as is BOA/Wells Fargo/JP Morgan Chase.

Posted by: Anonymous | July 14, 2010 6:27 PM | Report abuse

But Bernanke's banking, wall street and speculator buddies are doing just fine thanks to the Fed ripping off depositors and paying them nothing to use their (depositors) money.

Posted by: Anonymous | July 14, 2010 7:07 PM | Report abuse

There is significant concern that the economy is actually in a type of deflation, which is something that has not been given much attention.

Posted by: Anonymous | July 14, 2010 7:16 PM | Report abuse

250 new Federal Regs in the so-called Fin Reform Bill.

There will be NO IMPROVEMENT from this COLOSSAL PIECE OF MERDE which does NOT address the very areas of the financial system which were most in need of SOME additional regulation.

No wonder the Chamber is SMASHING the Fright House today and tonight on TV.

Look at Pelosi, furious with Gibbs for saying the ReBoobs will take the House in just 112 days from now. That will happen because the 'Stimulus' - didn't. It only put us in incredible debt, the largest of any country in the History of the World and January First, the TAX INCREASES WILL BE THE LARGEST IN THE HISTORY OF THE USA, making a total LIAR of BHO's promises to keep them low, especially for those making under $250,000. least the GOVERNMENT unions are going to the bank BIG TIME, whether they're working or not. Ha, ha!

No jobs for the private sector...for perhaps 5 to 10 years....if we're lucky.


Posted by: ISlamIslam | July 14, 2010 7:27 PM | Report abuse

its official

the fed has determined obama is a

board certified economic fool

""However, members noted that in addition to continuing to develop and test instruments to exit from the period of unusually accommodative monetary policy, the Committee would need to consider whether further policy might become appropriate if the outlook were to worsen appreciably."

wash po 7-14-2010

Posted by: ProCounsel | July 14, 2010 7:37 PM | Report abuse

Grapes of Wrath

Posted by: Anonymous | July 14, 2010 7:48 PM | Report abuse

Whatever this collection of clowns in Congress do this year will be REVERSED by their replacements next year IF the voters come to their senses this November, otherwise, it's high Marx for Obunker's Socialist dreams.

If VOTING doesn't do it, there is an alternative......


Posted by: ISlamIslam | July 14, 2010 7:57 PM | Report abuse

Recovery? I don't see no stinking recovery. It has been a continuous slide downwards since the dems took control of the Senate in 06

Posted by: Straightline | July 14, 2010 8:33 PM | Report abuse

As most growing nations in the world have a good handle on technology that was once the premier U.S. export, and by handle I mean educated engineers/scientists and world-wide financiers willing to invest, one must come to the realization that our exports, basically limited to government supported agriculture, will not get us out of this economic debacle. So, bring back manufacturing with an automatic union commitment to a three year right-to-work. Suspend NAFTA and all Chinese labor involvement for three years. Set up specific tariffs. Then watch employment and the lower and middle classes grow again. We have in this country a three hundred million plus market for our goods and services. Let's do it ourselves!

Posted by: HarGru | July 14, 2010 8:51 PM | Report abuse

Please sign this petition to lower U.S Officials salaries!

Copy and paste link below into address:

Posted by: Anonymous | July 14, 2010 9:01 PM | Report abuse

"But they see little threat from inflation, projecting that prices will rise 1 to 1.1 percent this year, compared with the 1.2 to 1.5 percent rate they forecast in April. The new outlook is well below the 1.7 to 2 percent inflation rate that the Fed targets over the longer term."


Folks - these inflation numbers are completely bogus and completely cooked. For the true inflation numbers, look at the price of gold.

And Bernanke knows exactly why the price of gold is out of control--- under reported (that means a lie) INFLATION, INFLATION, INFLATION.

Posted by: hz9604 | July 14, 2010 9:02 PM | Report abuse

We are solidly in a stagflation period.

Posted by: hz9604 | July 14, 2010 9:03 PM | Report abuse

Wait a minute! Just wait a minute! Obama and Biden and Reid and Pelosi are all saying that everything is fine, everything is just fine, thank you! So what are you telling me here, that they're all lying? Can they do that? Can elected officials whose jobs it is to look out for our interests lie to us? Well, when did that happen? Obama promised he'd take care of us. He promised to bring this country together! He promised no more racism. Are you telling me that that guy from South Carolina that EVERYONE MADE APOLOGIZE because he yelled out "YOU LIE!" was actually telling the truth? Well, is anyone going to apologize to him?

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Posted by: Anonymous | July 14, 2010 9:17 PM | Report abuse

Zippy's fuzzy math isn't adding up. Who woulda thunk that? Say it isn't so. Obonehead, Joe biteme and Queen Nancy and Goober Reid keep telling us the stimulus is working. You mean I've been lied to. You're shucking me.

Posted by: theBozyn | July 14, 2010 9:30 PM | Report abuse

Thbis is all George Bush's fault because he lied about weapons of mass destruction. You loser who voted for Obama and are out of work--Boo hoo!!!!

Posted by: Anonymous | July 14, 2010 9:40 PM | Report abuse

Slower??? How about the economy is CRASHING! China's economy is in a downturn and India is experiencing "official" inflation of 14.5%. European government's are being forced to sell at minimum 4 trillion dollars in bonds to keep their safety nets running and the U.S., after last years looting by Wall Street, faces an astonishing 37 trillion dollar shortfall in public employee retirement funds. The world is about to enter the worst depression in modern history, the worst financial collapse in 400 years or more, an all the Fed and the idiots in the White House can blather about is a "slowdown".

THEY got us into this mess with their free trade lunacy. It is nothing more than a gigantic global Ponzi Scheme that no one other than a few purposefully ignorant and overwhelmingly greedy politician's and businessmen believe in. Before this is over, the French Revolution will look like a Sunday brunch. And just think, Obama and the Democrat's in Congress ruthlessly blew it. They could have prevented this if they had actually re-opend those trade agreements, curbed free trade, reigned in Wall Street and those banks, actually worked on the economy. Instead, they danced to the tune played by the far left and the entire world is going to pay for that bit of madness.

Posted by: Anonymous | July 14, 2010 9:40 PM | Report abuse

Please leave our ss alone. We old people worked hard all our life for this. Let others work like we did to live.Do like President Regan did send people back to where they came from, unless they wish to live by our laws and work like we did.Let them cut the salaries on Capital Hill and the White House, Then they will learn to live like the rest of us.Posted by Anonymous

Posted by: dolly825 | July 14, 2010 9:42 PM | Report abuse

The clowns are at the Fed. Once you people realize this, the pieces will fit.

Gold is NOT in a bubble. A bubble is an unexplainable increase in the value of a commodity.

The reason gold is increasing is as plain as the nose on Ben Bernanke's face.

Gold is increasing because every central bank is throwing money at every problem.

Why do you think the audit of the Fed failed? Because the Fed guys leveled with Congress and told them "YOU DON'T WANT TO KNOW".

Posted by: hz9604 | July 14, 2010 9:43 PM | Report abuse

Slower than expected? Does that mean the pilots of our economic ship are having second thoughts about the ship's direction? Does that mean, the numbers are deviating from the projections? or does it mean, "things are still getting better, just slower than we thought, so don't give up, yet", ... or does it mean, "Houston, we have a problem"? I think the wording, "Slower than we would like" conveys greater sympathy, and evokes less anxiety, although it also conveys a lesser sense of control than "Slower than expected." On the other hand, sitting on the precipice, the unemployment gone, having fallen out of the statistics of unemployed to the statistics of no longer looking, resigned to giving up the house, calculating the relative merits of the different bankruptcy options, already having faced the shame of failure, trying now to limit the pain of loss, do semantics still have any meaning other than false pride?

Posted by: Anonymous | July 14, 2010 10:04 PM | Report abuse

With this good news, why don't we start thinking about amnesty for illegal aliens? That's right, Obama already is!!!

Posted by: Digitalman08 | July 14, 2010 10:14 PM | Report abuse

The intransigence of the right(including big business and the Chamber of Commerce) is slowing down the recovery. In England, the recovery is proceeding at a much more rapid rate, because the government, along with business, is all working together to make things happen for all the people. In America, we have people who are quite willing to hold the economy hostage for cheap, unpatriotic, partisan reasons.

Posted by: wd1214 | July 15, 2010 11:18 AM | Report abuse

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