When Will the Recovery Arrive?

Excerpt from Raymond James Economist Dr. Scott Brown's latest economic commentary:

The incoming economic data have continued to paint a bleak picture. Massive job losses, sharp declines in factory output, further declines in residential construction activity – there’s been no sign that the pace of decline is even slowing, let alone that a bottom is near. When will the recovery arrive? Not for a while.

...

The Fed’s central tendency forecasts, which exclude the three highest and lowest forecasts of the five governors and 12 district bank presidents (growth and inflation projections are 4Q-over-4Q, the unemployment rate is the 4Q average for that year):

	2009	2010	2011	longer run
Real GDP	-1.3% – 0.5%	2.5% – 3.3%	3.8% – 5.0%	2.5% – 2.7%
Oct. Proj.	-0.2% – 1.1%	2.3% – 3.2%	2.8% – 3.6%
Unemp. Rate	8.5% – 8.8%	8.0% – 8.3%	6.7% – 7.5%	4.8% – 5.0%
Oct. Proj.	7.1% – 7.6%	6.5% – 7.3%	5.5% – 6.6%
PCE Prices	0.3% – 1.0%	1.0% – 1.5%	0.9% – 1.7%	1.7% – 2.0%
Oct. Proj.	1.3% – 2.0%	1.4% – 1.8%	1.4% – 1.7%
Core PCE	0.9% – 1.1%	0.8% – 1.5%	0.7% – 1.5%
Oct. Proj.	1.5% – 2.0%	1.3% – 1.8%	1.3% – 1.7%

The projections of senior Fed officials from late January were significantly different from those made in October. No surprise, the outlook for GDP growth was lowered, while the unemployment rate is expected to be a lot higher this year and beyond. The weaker near-term GDP growth outlook should lead to a greater chance of a faster rebound later on (something like a “V”). However, there was strong agreement that the economy would remain well below its potential, even through 2011. A few Fed officials felt that it could be a number of years before economic output returns to its long-term path.

Comments

[market ace:]

I guess Bernanke was not listening at these meetings since he was painting another rosy picture for congress today and side stepping reality in order to make the market go up.. He wouldn't possibly be lying again would he?

Feb 24 04:35 PM

[Mad Hedge F...:]

The forecasting firm Macroeconomic Advisors says that we are going through the “epicenter” of the recession right now. They see Q4 GDP being revised down from -3.8% to -6.0%, and that Q1 will come in at -5%. These numbers fall somewhere in between the 1974 recession and the Great Depression in terms of their severity, and are double the worst case scenario offered only three months ago. A tsunami of infrastructure spending, stimulus, and newly recapitalized bank lending will bring positive growth of 2% in the second half. Lower interest rates are slowing down the home foreclosure rate. Many states and municipalities, like Denver, started shovel ready projects the very second that Obama signed the stimulus bill, but it will take months to see the impact on the data. In layman’s terms, thing are about to get a lot worse, then a lot better pretty quickly, giving us a classic “V” type bottom for the economy.

Feb 24 05:12 PM

[silverfox:]

there are an estimated 8400 banks in United States
A good many of these banks will disappear going forward.
until we get some real transparacy with bank balance sheets who knows the true value of any bank today.
the nationalization of the big banks ( which nobody wants ) may be the prudent thing to do.
once nationalized the government guarantees the banks liabilities.
then at some later date let it go public again.
dow 10,000 not for the next 2 years.

Feb 25 04:56 PM