At the June policy meeting, [Federal Reserve] officials projected that the rate of economic growth by the end of the year would be between 1% and 1.6%, up from 0.3% to 1.2% in their April estimates. The 2009 outlook was unchanged, with officials expecting growth between 2% and 2.8%. The figures are the “central tendency” of the projections, a range of estimates from 17 sitting policy makers excluding the three highest and three lowest. They were released today with Fed Chairman Ben Bernanke’s semi-annual monetary policy report to Congress.Read it here.
So what this means is that we still haven't had a recession, and upcoming second quarter growth figures are very likely to show, not a recession but accelerating growth. Now market fears [which are a constant at all times] are beginning to shift to warnings about inflation, but these are not any more likely to be realized than previous fears about recession. The reason is that high gas and energy prices are absorbing money that would otherwise be available for discretionary consumer spending. This results in a soft consumer market which in turn severely limits the extent to which vendors of non-essential items can raise prices.
