NY Fed's Dudley: Double Dip Unlikely
I smell a Bernanke endorsement deal...
I'm sick of hearing this from every two bit central banker with nothing better to do but assure us everything is under control. Of course there will be no double dip, we never got undipped from the last one. Duh.
Federal Reserve Bank of New York President William Dudley said the U.S. economic expansion may slow this quarter, while a relapse into recession is unlikely.
“Growth in the third quarter may turn out to be a bit less than we saw in the first half of the year, though we think there is only a slight risk of a double dip,” Dudley said today at a press briefing on the regional economy at the New York Fed.
Gee, that sounds slightly less Armageddon-ish than Bernanke's statements yesterday, who has been dosing Bill's coffee with Prozac?
Anyway, what's the reason Dudley gives for not expecting a double dip? Easy money and data that shows credit conditions are easing. Well that's awesome, let's wait and see what sort of impact financial reform and the Fed's new credit card rules have on credit and get back to that issue when we've got more data.
The risk of the economy slipping into a second recession is low in part because monetary policy is “quite stimulative,” Dudley said in response to questions from reporters at the briefing. The nation also doesn’t face “excesses in terms of inventories” and “highly cyclical” industries such as housing and auto sales are “already at very depressed levels,” he said.
Dudley also said he’s “optimistic” about avoiding a double dip because the Fed’s senior loan officers survey has shown credit conditions are easing.
The U.S. expansion over the past year has been less robust than prior recoveries, with a “sluggish recovery in employment,” Dudley said.
I'm shocked that a supposed economic genius would actually say stimulative monetary policy can keep this thing afloat in case we get with a second wave of economic disaster - did no one inform him that the Fed is out of arrows and standing out there all limp and useless with nothing left to shoot?