This despite better jobs numbers last month and an expected increase of over 100,000 private sector jobs this month.
But those are barely passable numbers when one considers the overall picture of 8 million lost jobs and about 150,000 new workers entering the job force every month.
Indeed, the Fed may be a little too optimistic from what I've been reading elsewhere. New York Times:
The central bank predicted that the economy would expand 2.5 percent to 2.9 percent in 2012, well below its June projection of 3.3 percent to 3.7 percent. For the following year, 2013, the Fed predicted growth of 3 percent to 3.5 percent, down from a range of 3.5 percent to 4.2 percent.
The unemployment rate, it predicted, would still be at least 8.5 percent at the end of 2012, at least 7.8 percent at the end of 2013 and at least 6.8 percent at the end of 2014. Such reductions probably would come in part from people abandoning the search for work, rather than those finding new jobs.
The unemployment rate was 9.1 percent in September. The government will release October figures on Friday.
This is a difficult time for the Fed and its chairman. Republicans charge that the central bank's existing efforts have gone too far, sowing future inflation. Democrats say that in hesitating to do more, the Fed is ignoring the plight of more than 25 million Americans who cannot find full-time work. And the sluggish pace of growth, which continues to fall short of the Fed's predictions, is a bright marker of its failure to stimulate a recovery.
Mr. Bernanke on Wednesday sought to argue that the Fed was trying to get things just right in maintaining a delicate but necessary balance between competing concerns about inflation and unemployment. He said that Republican critics were ignoring the Fed's record. Five years into the crisis, there is no sign of inflation.
You need economic activity for inflation to appear and since the economy has been at a virtual standstill, the threat comes from deflation - something Fed has handled fairly well by many accounts. Republicans are rightly concerned that Bernanke's anti-deflation policies may eventually come back to bite us in the backside with runaway inflation, but given the continued slow growth of the economy, it may be a while before we see that effect.