Transcripts of the monetary policymaking body of the Federal Reserve from 2002–2008.

Part of the difference stems increasingly from our more pessimistic take on potential output. Many of those outside forecasts have the unemployment rate rising to 5 percent, and we have it rising a bit more. Some of that difference is greater cyclical weakness that I would attribute to the depth of the housing downturn that we are forecasting. But some of it is just that we see potential output as very weak as well. That exaggerates or has the potential to create a GDP illusion in comparing the forecasts, where we look much, much weaker even though our output gap isn’t that much larger. For what it is worth, in the past week I have seen more people who do a serious tracking of the economy moving toward our outlook rather than away from it. So it wouldn’t surprise me if more outside forecasters weren’t showing not something as weak as maybe 1½ percent in the second half but something 2 percent or below.

Keyboard shortcuts

j previous speech k next speech