James Pethokoukis

Politics and policy from inside Washington

More on the big W

August 24, 2009

Having talked to a number of former White House economists/center-right economists in recent weeks, this analysis by Tony Fratto almost perfectly echoes what they told me:

Given the precarious state of household balance sheets and the continued uncertain outlook for the financial sector, an economic recovery with dips back to negative growth is already likely over the next two years. If the Fed gets wrong the sequencing, magnitude, or coordination (in the U.S., and across borders) of policy – or sends the wrong signals about its intentions — even that likely expectation would prove optimistic.

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