The Federal Reserve on Wednesday cut its forecasts for U.S. economic growth, but offered no hint of action. The Fed looks set to take a break, sit on the bench awhile and watch the game unfold. Nice.
The Fed downgraded its view of the labor market, saying it had been “weaker than anticipated” and pushed its forecast for unemployment higher. That means a “lost decade” in where employment isn’t forecast to return to previous highs through 2020 at least. “There are some cities that are not going to be at the unemployment rate they were before the recession started for another 20 years”, said Los Angeles Mayor Antonio Villaraigosa on Tuesday.
We are still only half-way through this Lost Decade, and perhaps we can turn things around by an aggressive mid-decade course correction. Losing half of a decade could be bad luck. Losing a full decade begins to look like recklessness.