June 22nd, 2011
Econintersect: Fed Chairman Ben Bernanke in his second press conference stated economic headwinds are longer lived than originally thought, and now projects a more normal economic growth not occuring before 2013.
The current economic soft spot in the USA which begain in April 2011, is also believed to be short - with a return to (the mediocre) early 2011 growth rates later this year.
Chairman Bernanke does not want to see budget cutting focusing on the near term, and believes near term budget cutting will be detrimental to jobs growth and the economy in general. He stated that he wants the long term budget brought into balance, and implied a ten year timeframe was reasonable.
Follow up:Bernanke also stated that BIS (Bank of International Settlement stress tests on USA banks for a Greek default showed there would be very little impact to the balance sheets. Greece is a very important and difficult situation according to the Chairman.
This is the second press conference for Chairman Bernanke, the first one was covered by Econintersect here. The FOMC meeting statement preceding this press conference can be viewed here. This press conference contained many words, but did not expand much the concise statement of the meeting statement. The Federal Reserve Chairman is a great dancer.
The table below of central economic projections was released during the press conference (notice the lowering of GDP and the increase in inflation forecasts for 2011). Please note that these projections have been downgraded further from their January 2011 projections.
Here is the graphic from the April Meeting:
In summary round numbers, this year the FOMC Board GDP projections have been lowered 1% on GDP, unemployment remains essentially unchanged, and inflation is up a little more than a half of a percent
source: Federal Reserve