Inflation, Interest Rates and Jobs – Where Are We Headed?

Posted on October 27, 2011


Back in January, 2011 when the members of the Board of Governors and Presidents of the Federal Reserve Banks met,

participants viewed the outlook for economic activity and inflation as having weakened significantly since last October, when their last projections were made. As indicated in Table 1 and depicted in Figure 1, participants projected that real GDP would contract this year, that the unemployment rate would increase substantially, and that consumer price inflation would be significantly lower than in recent years. Given the strength of the forces currently weighing on the economy, participants generally expected that the recovery would be unusually gradual and prolonged: All participants anticipated that unemployment would remain substantially above its longer-run sustainable rate at the end of 2011, even absent further economic shocks; a few indicated that more than five to six years would be needed for the economy to converge to a longer-run path characterized by sustainable rates of output growth and unemployment and by an appropriate rate of inflation. Participants generally judged that their projections for both economic activity and inflation were subject to a degree of uncertainty exceeding historical norms. Nearly all participants viewed the risks to the growth outlook as skewed to the downside, and all participants saw the risks to the inflation outlook as either balanced or tilted to the downside.  [federalreserve.gov]

The key concepts above that are troublesome were an increase in unemployment and the phrase ” Participants generally judged that their projections for both economic activity and inflation were subject to a degree of uncertainty exceeding historical norms” buried in the middle of the last paragraph above.

INFLATION_______________________________________
Annual US Inflation Rate is plotted monthly in gray (Consumer Price Index for All Urban Consumers:
All Items). The forecast for the target month is shown in green. Other links related to this economic
indicator are below.
CPI for All Urban Consumers: All Items – 5 Year History
CPI for All Urban Consumers: All Items Forecast
Target Month
Forecast
HDTFA
Forecast for the US Inflation Rate for the year ending in
the target month indicated (Consumer Price Index for
All Urban Consumers: All Items, not seasonally
adjusted.
September 2012
2.9%
1.07%
Updated Tuesday, October 4, 2011.
predictions inflation and interest rates us 2011
The best course of action to keep ahead of all of this would be to check for recent articles under search terms of your choice.  You can limit your search to the US but in this global economy, we need to keep ahead of events that will impact our recovery.  After all, our economy is still in the ICU having gone off the rails and landed in territory beyond the range of gps.
And what of the so-called financial experts?  In this mix today, no one knows how things will go.  A sense of foreboding and fear are operative.  If you know history and the way the human animal reacts; if you have followed a couple of stocks and observed interest rates on bonds; and if you keep up to date with news, you will be as well-informed as anyone and in a position to cooly take stock and reach a reasonable conclusion about what action to take in a particular economic area.
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Posted in: ECONOMY