WASHINGTON - If President Obama ever expected the economy to improve significantly before the 2012 election, Fed Chairman Ben Bernanke buried that hope this week.
The Fed's grim forecasts of what the Obama economy will look like throughout next year were bleaker than its modest earlier estimates. High unemployment will persist throughout 2012 along with sharply slower economic growth rates.
The Federal Reserve took no action at this time to deal with the chronically weak economy, sending yet another unmistakable message to the White House and a divided Congress that any real, long term improvement will require a change in fiscal policy.
Clearly, with the presidential election campaign officially beginning in two months, the White House was hoping the Fed would come up with some new, substantive initiatives to improve economic conditions. That won't happen anytime soon.
With unemployment at around 9 percent (more than 16 percent when part-time and temp workers are included), the Fed forecasts that the jobless rate will remain around 8.6 percent by the end of next year. Worse, unemployment will still hover somewhere between nearly 7 percent and 8 percent by late 2014 unless there is a dramatic change in economic policies.
The Fed had expected the labor picture to improve by now, forecasting in June that unemployment would be down around 8 percent by the end of 2012.
This summer the Fed bullishly predicted the economy would grow by between 3.3 percent and nearly 4 percent in 2012. It sharply and sheepishly lowered that forecast Wednesday to between 2.5 percent and 2.9 percent, an growth rate that cannot make much, if any, of a dent in the now 25 million Americans who cannot find full time jobs.
To see how far away the failed Obama economy is from any kind of a full recovery, listen to University of Maryland business economist Peter Morici:
"The economy must add 13.4 million jobs over the next three years -- 373,000 each month -- to bring unemployment down to 6 percent. Considering continuing layoffs at state and local governments and federal spending, private sector jobs must increase at least 400,000 a month to accomplish that goal."
The Fed's bearish report came as a cold shower for the White House and the Obama campaign. The president's latest $447 billion tax and spend jobs scheme is opposed by Republicans, and a number of Democrats facing tough re-elections next year, and stands no chance of passing Congress.
Pieces of the plan may be enacted, such as extending the payroll tax cut and unemployment insurance benefits, but the major provisions are dead.