Bernanke: Full Recovery Years Away

Fed says inflation on target, but unemployment high, growth sluggish
By Mark Russell,  Newser Staff
Posted Jan 26, 2012 2:03 AM CST
Bernanke: Full Recovery Years Away
Federal Reserve Chairman Ben Bernanke leaves his news conference in Washington yesterday.   (AP Photo/Jacquelyn Martin)

Don't get too excited about that pending economic rebound. The Federal Reserve's announcement it will keep interest rates super-low into 2014 is a key sign that the US economy is years away from truly recovering, reports the New York Times. Yes, the economy has picked up "moderately," said the Fed in a statement, but jobs are still scarce and growth is expected to be sluggish for the foreseeable future—2.7% in 2012, 3.2% in 2013, and perhaps as high as 4% in 2014. “What did we learn today? Things are bad, and they’re not improving at the rate that they want them to improve,” said the chief US economist at HSBC.

In a move to increase transparency, the Fed for the first time published the individual predictions of the policy-making committee's 17 members; eleven said they expected rates to stay low until 2014. But as the Fed was widely expected to keep rates low for the next couple of years anyway, the announcement should have little effect. “I wouldn’t overstate the Fed’s ability to massively change expectations through its statements,” said chairman Ben Bernanke. “It’s important for us to say what we think, and it’s important for us to provide the right amount of stimulus to help the economy recover from its currently underutilized condition.” The Fed also published its long-term goals, saying officials aim to bring unemployment to under 6% and keep inflation around 2%. While its inflation goal appears on target, unemployment is predicted to still be at 6.7% by the end of 2014. (Read more Federal Reserve stories.)

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