Fed: 2009 will worsen with improvements in 2010

Today's release of the minutes from the Federal Open Market Committee's January meeting provides new insight into the thinking of the Federal Reserve. Beyond the rather dry voting record the FOMC has begun releasing a Summary of Economic Projections (SEP). The SEP addition provides forecasts of the economy and tracks changes in the outlook of FOMC members. The figure below provides the January outlook for GDP growth and unemployment in the coming years.

GDP growth began to slump and unemployment began to rise in 2007 and saw rapid change in 2008. The FOMC predicts that 2009 will be worse by both measures but that growth will increase in 2010. The Fed is careful to state that while its new data should inform policy that "
Considerable uncertainty attends these projections, however."

In fact, predicted ranges widen as the figures head out toward 2011.

The new release is part of an effort, stressed in a speech today by Chairman Bernanke, to improve transparency at the Federal Reserve. Commented Bernanke,

But, as I have discussed today, we will do more on this front, both expanding the information we provide and improving how we communicate that information. Increased transparency is the best way to demonstrate that the Federal Reserve's nontraditional policies are well conceived, well managed, and produce substantial public benefit.

This plan is to include a new website to the slew of websites already being added to the government rolls, recovery.gov, financialstability.gov, among others.