There doesn't appear to be much consensus among Federal Reserve governors and presidents about the U.S. economy. Despite the FOMC's decision to take aggressive action to loosen monetary policy earlier this month, the economists' opinions about the current and future path of the U.S. recovery are all over the place. This can be seen by the committee's discussion as well as the new economic forecasts released with the meeting's minutes.
If the Economy Is Improving, Why the Action?
Let's start with the one thing that all of the FOMC members broadly agree on: the U.S. economy is recovering. In a sense, it is somewhat surprising that the only thing all these economists clearly agree on is that the economy is improving; after all, they just voted to expand monetary policy, implying that they don't feel that the recovery is strong enough. Take the following exceprt from the Staff Economic Outlook:
Because the recent data on production and spending were broadly in line with the staff's expectations, the forecast for economic activity that was prepared for the November FOMC meeting showed little change to the staff's near-term outlook relative to the forecast prepared for the September FOMC meeting. However, the staff revised up its forecast for economic activity in 2011 and 2012.
That certainly doesn't sound like a group that would also decide to take aggressive action to stimulate the economy during the same meeting. If the economy was performing as they expected, and they revised their future forecasts upwardly, then why did they feel the need for that action? Another except explains:
Although participants considered it quite unlikely that the economy would slide back into recession, some noted that continued slow growth and high levels of resource slack could leave the economic expansion vulnerable to negative shocks.
So there's little fear of a double dip, unless new negative shocks hit the market. The latest asset purchase plan is meant to strengthen the U.S. economy enough that it isn't vulnerable to that action.