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FED REVISES GROWTH ESTIMATE UPWARDS

Posted by Admin Posted on Feb 16 2011

Just before going into their February meeting, the Federal Reserve Board issued its revised estimate of GDP growth for 2011. The November estimate was 3.0 - 3.6%; the new estimate is 3.4 - 3.9%. The Fed's estimate is even more optimistic than the results of a Wall Street Journal Survey of 51 Economists released last week

On the other side of the economic question, the Fed is projecting unemployment will fall to between 8.8 - 9% by the end of the year.

The political implications of the new Fed figures do not bode well for Republicans.  If unemployment is down by the end of the year, and recent projections of better wage gains come to pass, voters will likely give credit to President Obama.  Deficit hawks also can't be all that happy with the improved forecast.  They've based their arguments on the deficit as a percentage of GDP.  If GDP grows, the deficit appears to shrink by comparison.

Of course, neither of these happens to be true.  But in politics, the perception is often more important than thereality.