Fed lowers GDP forecast, mulls more action

[thundley4]

(Reuters) - The Federal Reserve on Wednesday slashed its forecast for growth, raised projections for unemployment and said it was mulling the possibility of buying more mortgage debt to spur a struggling recovery.

While members of the central bank's policy-setting panel voted 9-1 to hold a steady course, one official urged more stimulative action now and Fed Chairman Ben Bernanke said Europe's debt crisis posed big economic risks.

At a news conference after a two-day meeting, Bernanke said buying more mortgage-backed securities was an option to help the economy and added that the U.S. central bank was still looking for ways to give clearer guidance on its policy path.

"While we still expect that economic activity and labor market conditions will improve gradually over time, the pace of progress is likely to be frustratingly slow," he said.

"Moreover, there are significant downside risks to the economic outlook," Bernanke said. "Most notably, concerns about European fiscal and banking issues have contributed to strains in global financial markets, which have likely had adverse effects on confidence and growth."

He said the central bank was "closely" monitoring developments in Europe. Group of 20 political leaders are meeting in Cannes, France, on Thursday and Friday, with the euro zone debt crisis expected to dominate talks.

Reuters

We are so screwed.

[Lacarnut]

If the economy is going to slow down, I don't see how unemployment is going from 9.1% to 8.6%. He sounds like he is trying to pull a rabbit out of his ass. QE3 will be here sometimes next year. It will boost stocks, gold and silver but do relatively little to boost hiring. 

[Chris_]

If the economy is going to slow down, I don't see how unemployment is going from 9.1% to 8.6%.

The same way it's being going down all along... people give up looking for work if there's no work to be done.  That's why the BLS is constantly revising and increasing unemployment numbers month after month.  Obama doesn't know the first thing about creating jobs and the people he's put in place are openly hostile to the policies that create jobs in the first place.

[CG6468]

Thew best action the FED could take is to dissolve itself.

[docstew]

The same way it's being going down all along... people give up looking for work if there's no work to be done.  That's why the BLS is constantly revising and increasing unemployment numbers month after month.  Obama doesn't know the first thing about creating jobs and the people he's put in place are openly hostile to the policies that create jobs in the first place.

Which is why when the BLS all of a sudden in July-Aug next year will start announcing unemployment numbers around 7%, and figure out some way that they could fudge the numbers to make it work.

Good side of that, those numbers will ring hollow with those people who are out of work.