Start of AP Headline Reacting to Fed's Economy Downgrade: ''Fed sees hopeful signs ...."
Here's a CNN e-mail alert I just received a couple of hours ago:
So how did the Associated Press's Jeannine Aversa report the above raw news? As you would expect an Obama apparatchik to do it (reproduced in full as it existed at 3:15 p.m.; bold after title is mine):
Fed sees hopeful signs but downgrades '09 forecast
WASHINGTON (AP) — The Federal Reserve expects the economy to improve in coming months, even as policymakers have downgraded their outlook for all of 2009.
Fed Chairman Ben Bernanke and his colleagues believe business sales and factory production will begin to gradually recover later this year as President Barack Obama's stimulus package and the Fed's aggressive efforts to end the recession take hold. In new Fed documents, they also pointed to signs that the recession's grip was easing in the current quarter.
The Fed now expects the economy will shrink this year between 1.3 and 2 percent. The old forecast called for a contraction between 0.5 and 1.3 percent. The unemployment rate may hit nearly 10 percent, up from 8.8 percent in the old forecast.
Here's a "little" math problem, Jeannine: The economy has already shrunk 1.56% (the first quarter's preliminary annualized -6.1% expressed on a pure quarter-over-quarter basis). That means, according to the Fed, that the economy will shrink or grow by a teeny-tiny amount (a quarter over quarter average of at most +0.08% or -0.14%) during the rest of the year. All this will occur while the nation's population continues to grow, meaning that the Fed's prediction is for a slight reduction in per-capita GDP even if its best-case scenario comes true. That is, the average person will be worse off at the end of the year than they were on March 31.
And what's this nonsense about "President Barack Obama's stimulus package .... tak(ing) hold"?
I thought the stimulus legislation had to be enacted immediately to prevent the economy from going in the tank. Why, it was soooooo urgent that nobody even had the time to read it before they voted. Ohio Senator Sherrod Brown even had to fly in on a government plane from his mother's funeral to cast the deciding vote.
What happened? Three months later, the economy's in the tank and the "stimulus" hasn't taken hold.
The vast majority of "stimulus" payments thus far has been transfer payments, which, whatever their alleged benefits, do not stimulate economic recovery or growth.
Meaningful tax cuts would have "taken hold" and actually stimulated the economy by now, and could have been made retroactive to January 1 -- and I'm not talking about the Obama cut that the vast majority of Americans have said is making no noticeable difference in their lives. Only nine percent say it's made a big difference, "fifty-eight percent say no difference, and the others don't know."
But to Jeannine Aversa, the "hopeful signs" are more important that the belief stated by the Fed that the economy will be worse than it originally thought.
Cross-posted in revised form at BizzyBlog.com.