Posted Wednesday, June 22, 2011, at 2:19 PM
The Federal Reserve's Federal Open Market Committee weighs in :
[T]he economic recovery is continuing at a moderate pace, though somewhat more slowly than the Committee had expected. Also, recent labor market indicators have been weaker than anticipated. The slower pace of the recovery reflects in part factors that are likely to be temporary, including the damping effect of higher food and energy prices on consumer purchasing power and spending as well as supply chain disruptions associated with the tragic events in Japan. Household spending and business investment in equipment and software continue to expand. However, investment in nonresidential structures is still weak, and the housing sector continues to be depressed. Inflation has picked up in recent months, mainly reflecting higher prices for some commodities and imported goods, as well as the recent supply chain disruptions. However, longer-term inflation expectations have remained stable.
So: Things are worse than we expected. What to conclude?
The unemployment rate remains elevated ; however, the Committee expects the pace of recovery to pick up over coming quarters and the unemployment rate to resume its gradual decline toward levels that the Committee judges to be consistent with its dual mandate. Inflation has moved up recently, but the Committee anticipates that inflation will subside to levels at or below those consistent with the Committee's dual mandate as the effects of past energy and other commodity price increases dissipate.
We need a word for this. It's not optimism. Fauxptimism? No, that's clumsy. The point is that the Fed is less optimistic about growth and its response at present is to do what it's been doing.
The CBO, meanwhile :
The national debt will exceed the size of the entire U.S. economy by 2021 — and balloon to 200 percent of GDP within 25 years — without dramatic cuts to federal health and retirement programs or steep tax increases, congressional budget analysts said Wednesday.
Exactly what we knew, although as Mitch McConnell reminds us, tax increases are not on the table.