I wasn’t too surprised to learn that Ben Bernanke is an optimist. But Peter Orszag too? The director of the CBO always seems pretty downbeat to me. Yet today, releasing an updated economic forecast, he says that "CBO’s projections do not show the slowdown in economic growth becoming severe enough to meet the economic definition of recession". In fact, he projects 1.9% growth in real GDP this year.
Orszag sees inflation falling, too, with the CPI dropping from 4.1% in 2007 to 2.1% in 2008 and 1.9% in 2009, while the core CPI (excluding food and energy costs) will fall from 2.1% in 2007 to 1.7% in 2008, ticking up a little to 1.8% in 2009. All in all, not a bad performance for an economy where "the risk of a recession remains elevated, and economic activity will remain subdued for some period as the economy continues to work through the effects of problems in the housing and financial markets and the high price of oil".