Fed Sees 5-6 Years Of Economic Weakness

The Federal Reserve released their FOMC minutes from their last meeting in June and the most eye popping statement was that they see economic weakness and do not see a full recovery from this last recession for another five or six years.

Here is the quote in its entirety:

"Participants generally anticipated that, in light of the severity of the economic downturn, it would take some time for the economy to converge fully to its longer run path as characterized by sustainable rates of output growth, unemployment, and inflation consistent with participants’ interpretation of the Federal Reserve’s dual objectives; most expected the convergence process to take no more than five to six years. About one-half of the participants now judged the risks to the growth outlook to be tilted to the downside, while most continued to see balanced risks surrounding their inflation projections. Participants generally continued to judge the uncertainty surrounding their projections for both economic activity and inflation to be unusually high relative to historical norms."

Most recessions occur every 5 or so years. If it takes this long to recover from the Great Recession of 2008, we'll already be in another downturn without having recovered from this one.

Ouch.