Some interesting bits here. First, to quote:
“The Fed says it expects the economy will shrink between 1.3% and 2% this year. It had earlier said the economy could contract between 0.5% and 1.3%.”
So that’s…good news? That we will contract more than what they said earlier?
“It also warned that US unemployment could reach 10%.”
Definitely not good news. Especially since “real” unemployment, which would include discouraged workers and those who haven’t actively tried to find new jobs for more than 3 months (but of course are still unemployed) is always higher. And forget about those with jobs that they are forced to take, at lower wages and worse hours, just to make ends meet.
“Participants agreed that the information received since the March meeting provided some tentative evidence that the pace of contraction in real economic activity was starting to diminish,” the minutes showed.
It is critical that this be interpreted correctly. First, the observation is that the contraction is still going on, but is showing signs of slowing down. That means we are still in actual recession (with negative GDP growth/GDP shrinkage) much less in an economic malaise (which will last longer than the actual recession, which is technically over after we hit bottom and start the slow climb up). But the economy is still contracting, just not as badly as before.
Second, what this does mean is that most of the areas that have been battered lately have finished…being battered. So the loss of construction work, for instance, is finally basically all gone and no longer contributes to negative GDP growth. Now, that means that people don’t have jobs, but it means that they have already lost their jobs, not that they are still losing them.
Finally, we must not take this as a sign that we can stop working hard to jump start the economy. A second major stimulus is probably needed (the ARRA is pretty back-loaded as it is, though at 3% of GDP this year and next it’s not small, either) and we can’t lose sight of that just because our contraction is slowing down.