It started out, believe it or not, in July 2008!
In sum, this year and next will be quite challenging. The economy will grow this year but at a slow pace, and the unemployment rate is likely to get worse before it gets better. At the same time, inflation will be uncomfortably high for a while.
I am more optimistic about the outlook for 2009 and I expect we will see economic growth return to near its longer-term trend. But to prevent recent inflation from continuing(!) to plague the economy and to avoid a rise in inflation expectations, I believe the current very accommodative stance of monetary policy will need to be reversed, and depending on how economic conditions evolve, I anticipate that this reversal will likely need to begin sooner rather than later.
And has continued, uninterrupted, to today:
“I feel pretty good about the domestic economy,” Mr. Plosser said on Thursday in response to audience questions after a speech in Allentown, Penn. He acknowledged “there are risks in Europe” but added the U.S. exposure to that region is relatively small, so a recession in Europe is “not enough in and of itself” to derail the U.S. recovery.
In his formal speech, he said “I would prefer that we start to raise rates sooner rather than later.” The official added “this may allow us to increase rates more gradually as the data improve rather than face the prospect of a more abrupt increase in rates to catch up with market forces, which could be the outcome of a prolonged delay in our willingness to act,” the official said.