Fed Bank Pres. Issues Warning

The president of the Federal Reserve Bank of St. Louis, James Bullard, recently said that he expects unemployment to head unavoidably into double digits and that inflation poses a larger risk than many analysts believe in the medium term. At a time when many Americans are looking for good news related to the economy, Bullard’s statements sadly come as no surprise.

Data released earlier this month confirmed that unemploymet has reached a 26-year-high of 9.8 percent, a staggering figure that has far-reaching rammifications on the economy and on the life of the average American. Bullard’s prediction that unemployment will continue to soar into the double digits means that the worst, at least in one sense, is yet to come.

Bullard also urges more people to focus on the threat that inflation poses on the economy, one that, according to Bullard, has been underplayed by many economists to support federal spending packaged. However, Bullard does believe that a 2.5 to 3 percent growth in the economy in the second half of 2009 does seem reasonable, a silver lining on an otherwise dark cloud.

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