Looking at the revised growth, inflation and funds expectations following the Fed meeting last week we see they have shifted into a much slower gear for the US economy.  I am sure there was a bit of a deflated mood (pun intended) during the meeting where the poor jobs report cast a pall over upcoming policy directives.

We can see from the new economic projections there is an even lowered expectation of growth, and fed funds rate.  Perhaps only one or two Fed governors skewed the data downward (it was discovered James Bullard now has the lowest numbers on the dot plot) but it still shows central tendency lowered the bar

The significant change that I can see is in the range of GDP estimates out to 2018, where even the most optimistic scenario has only modest appreciation in 2017 and then a shift downward the following year.  Clearly the assumption is being made by the Fed there will be no fiscal side of the equation to help bolster growth prospects.

If the Fed is correct here we may see the effect hit markets later on this year, and if some negative shock happens these reduced projections will ultimately become rosy and perhaps obsolete.  The economy is walking a tight rope here and there is very little needed to push it over the edge.

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