Wikinvest Wire

Bernanke: Economic rebound later this year

Tuesday, May 05, 2009

Is there any reason to think that today's forecast for the U.S. economy by Fed Chairman Ben Bernanke is any better than forecasts he's provided in the past?

From today's statement before the Joint Economic Committee:

We continue to expect economic activity to bottom out, then to turn up later this year. Key elements of this forecast are our assessments that the housing market is beginning to stabilize and that the sharp inventory liquidation that has been in progress will slow over the next few quarters. Final demand should also be supported by fiscal and monetary stimulus. An important caveat is that our forecast assumes continuing gradual repair of the financial system; a relapse in financial conditions would be a significant drag on economic activity and could cause the incipient recovery to stall.
Conditions are always expected to improve in about six months...

Even last year...

From a June 3, 2008 speech before the IMF in Spain:
Broadly speaking, the functioning of financial markets has improved of late, but conditions remain strained and some key funding and securitization markets have shown only tentative signs of recovery.
...
Overall economic growth was quite slow but apparently positive in both the fourth quarter of 2007 and the first quarter of this year. Activity during the current quarter is also likely to be relatively weak. We may see somewhat better economic conditions during the second half of 2008, reflecting the effects of monetary and fiscal stimulus, reduced drag from residential construction, further progress in the repair of financial and credit markets, and still solid demand from abroad. This baseline forecast is consistent with our recently released projections, which also see growth picking up further in 2009.
Lest anyone need to be reminded, the worst economic and financial crisis since the Great Depression occurred just a few months later.

4 comments:

dearieme said...

The boys will all be back for Christmas.

Kalpa said...

I get tired of these DAILY announcements of quick turn arounds. Psychology is their only tool left.

Phill Tomlinson said...

History repeating itself. Hoover said the same in 1931, stating a recover would come about but never did as unemployment kept rising. We are in 2009 so similar timeline to 1931.

Bernanke also said no worries about the subprime too.

Chrystal K. said...

I hope the economy does pick up again "later this year." It's just sad that the unemployment rate is expected to continue to rise. Hopefully we can get through this time though and learn some valuable lessons.

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