Charles Plosser speech; Summary of Economic Projections

Fed´s Summary of Economic Projections by Charles Plosser and his own more optimistic view for the economie.

So let me quickly summarize the projections offered for this year and next. The central tendency of annual real GDP growth in 2012 ranged from 2.4 percent to 2.9 percent and for 2013 the range was 2.7 to 3.1 percent. This suggests moderate growth this year, with some pick-up for 2013. The central tendency of the inflation projections was near 2 percent for 2012 and 2013. The projections for unemployment reflect some differences. Those projections have unemployment ranging from a low of 7.8 percent to a high of 8.0 percent by the end of 2012. Since the unemployment rate currently stands at 8.2 percent, having fallen nearly a percentage point since last August, the most pessimistic forecast says that we will not make much progress this year on further reducing unemployment. The more optimistic view seems to be that unemployment will continue to drift down gradually over the remainder of this year. As for the end of 2013, the central tendency widened somewhat from a low of 7.3 to a high of 7.7 percent. Again, some expect the unemployment rate to continue a moderate downward path while others are less sanguine. I think it is fair to say that the projections in April represented an upgrade in the near-term outlook compared to the January projections. Indeed, near-term output and inflation edged up and unemployment edged down.

My own views place me in the slightly more optimistic camp. My outlook is for about 3 percent growth in both 2012 and 2013. I predict that inflation will hover near or slightly above 2 percent over much of the period. My optimism is most evident in my projections for the unemployment rate. I believe that it will continue to drift down gradually, reaching 7.8 percent by the end of this year and near 7 percent by the end of 2013.