Sign In
SHARE
The Fed Scales Back its Growth Forecasts
A quick note about the new GDP forecasts from the Fed:
Policy makers estimate U.S. gross domestic product will increase by 0.3 percent to 1.2 percent this year, compared to the 1.3 percent to 2 percent growth they predicted in January, according to Fed records released today...
Total inflation will run between 3.1 percent and 3.4 percent, the Fed said, compared with a January forecast of 2.1 percent to 2.4 percent.
It's not true to say, as SAR does today, that if GDP growth is less than inflation, then we've got negative real growth. Headline GDP figures are real, not nominal, and are reduced by a very broad inflation measure known as the GDP deflator.
All the same, a CPI above 3%, accompanied by GDP growth below 1%, is definitely a move in the direction of stagflation. It's also worth noting that US population growth is running about 0.9% per year, so anything below that means that real GDP is declining in per-capita terms.
And yet. Oil's at $135 a barrel, and I remember reading all manner of stuff when it was in the $30 to $50 range about how every $10 rise in oil prices meant half a percentage point being cut off GDP growth. By which yardstick we would be growing at a breakneck pace right now were it not for those pesky oil prices - never mind the credit crunch, housing crisis, and everything else. Obviously, that oil-to-GDP yardstick proved to be faulty. But even so, I think if you told any economic forecaster a couple of years ago that in 2008 oil prices would be at $135 a barrel, they woud have told you that in that event 1% GDP growth would actually be quite a good outcome.
Loading...
Thank you for registering as a Portfolio.com Insider. Your comment has been added.
Create Your Public Profile
- The Times' Rorshach Geithner Story
- Apr 27 2009 9:26AM EDT
- Sinking Animal Spirits
- Apr 27 2009 8:45AM EDT
- Counter-cyclical Urban Policy
- Apr 26 2009 10:00AM EDT
- Be Your Own Counterfeiter
- Apr 26 2009 9:36AM EDT
- Being Tim Geithner
- Apr 25 2009 12:37PM EDT
- Notes From a Press Conference Naif
- Apr 25 2009 9:41AM EDT
- What Good is the News?
- Apr 25 2009 8:32AM EDT
- Stressful Enough
- Apr 24 2009 2:29PM EDT
- Not Regretting the Pound
- Apr 24 2009 1:09PM EDT
- Introducing the New Ford Squeeze
- Apr 24 2009 9:47AM EDT
- Non-Economic Questions of the Day
- Apr 24 2009 9:12AM EDT
- The Stress Test Blind Alley
- Apr 24 2009 8:36AM EDT
- Happy Hour
- Apr 23 2009 9:40PM EDT
- Recovery Without Rebalancing
- Apr 23 2009 6:13PM EDT
- The Shape of Your Recession
- Apr 23 2009 5:11PM EDT
Archive
Categories
Links
- Email Ryan Avent
- Econospeak
- Financial Crookery
- The Epicurean Dealmaker
- Naked Capitalism
- Alphaville
- Marginal Revolution
- The Panelist
- FP Passport
- Overcoming Bias
- Andrew Leonard
- Barry Ritholtz
- Brad Setser
- Carbon Tax Center
- Calculated Risk
- Greg Mankiw
- Free Exchange
- Dean Baker
- Alexander Campbell
- Kash Mansori
- The Bayesian Heresy
- A Fistful of Euros
- John Quiggin
- Michael Mandel
- Lance Knobel
- Mark Thoma
- Dan Gross
- Curbed
- Streetsblog
- Chris Anderson
- Deal Journal
- MarketBeat
- DealBook
- DealBreaker
- Carl Bialik
- Michelle Leder
- Brad DeLong
- Ultimi Barbarorum
