The numbers of late have been horrendous. Today a pile of more bad news. Yesterday we got this from the Fed Minutes:

Participants generally anticipated that it would take some time for the economy to converge fully to its longerrun path; most expected the convergence process to take no more than five to six years.

No more than five or six years? Where did that come from? I thought we were doing fine.

The long-term aspect of this problem we are facing probably will take us six years to work through. For the Fed to put this out there was not done without significant consideration. There were quite a few folks who were hoping for the turnaround to take hold later this year. Now they have to wait a half decade. This is not good for confidence. But I give the Fed an “A” for saying it. It is the most probable outcome. The Fed’s words were chosen as a warning of QE 2's arrival later this year. Maybe sooner. What might a six-year slow down look like? We have no clue. All the long-term projections that are being bandied about today are assuming a decade of steady growth

Here is the GDP forecast from the Fed. There is no slowdown in this. The low estimate is 2.8% for far into the future. Bernanke can neither justify or sell QE 2 with these numbers as a backdrop. The long term trend would be about 3%. That is maximum sustainable growth without inflation. Either the Fed's forecast is off the mark, or they have no excuse for a QE party.

We get the same muck from the CBO. Here is their numbers:

Soon we will get the annual report from the SS Trust Fund. Their rosy outlook will also be achieved as result of an economic forecast that has no chance of being realized.

The Fed has put a long-term low/no growth possibility on the table. They have done it in effort to support a launch of the QE 2. I would like to see some economic forecasts from the CBO that reflected the consequences of a six-year GDP that averaged 1%. The numbers that come from that analysis for total debt, debt to GDP, State finances, all private pension funds, Social Security/Medicare and unemployment would be a big eye opener. It looks like an implosion to me.

If the Fed wants to sell the next round of monetary insanity it will have to do it with a budget that shows what happens to us if we don’t grow. Mr. Elmendorf (CBO) and Mr. Goss (SSTF) should do the same. If you want to scare the populace into accepting another QE then at least we should get a look at what we are supposed to be afraid of. The bad news is that if we did see the future under the lens of 1% long-term GDP growth it would scare us to death. And therefore justify Mr. Bernanke’s plans.