The FED’s June Report Card - June 25,2009

The Federal Reserve’s latest report card for the economy is not bad…considering. In fact, it’s the most positive statement about the economy in recent memory…saying that the downturn is slowing and deflation is no longer a threat.

Effectively, this means that we still have a problem, but are in no immediate danger of falling off a cliff. So I guess that’s encouraging! Economic activity is tracking at a 1.3% rate of decline in the second quarter…far better than the previous 6 months. So…grade? “D”…but keep in mind that’s a big improvement!

Chairman Bernanke and the Federal Reserve get a better grade. I give them an “A-”…

Here are their courses:

· Perseverance…A…no signs of policy let up.
· Stick to your guns…A…no signs of waffling about keeping interest rates real low.
· Printing money…B…OK, but maybe a little much.
· Buying Treasuries…A…they need to…as foreign demand is off.

Overall…Great job. And that should help the economy improve its grade over the next few months…If it does…Bernanke should get the “Teacher of the Year” award.