Ya Think!  My first respose to Bernanke’s statement.

Federal Reserve Chairman Ben Bernanke, in a speech in Washington, D.C., said the central bank will begin to publish quarterly long-term economic projections. The outlooks will offer six-year forecasts on unemployment, inflation and economic output. Previously, the U.S. central bank only made public its estimates out to three years.

The first long-term forecast, released Wednesday, said that the economy would grow 2.5% to 2.7% in the several years after 2011. The Fed also predicted that the unemployment rate would fall to 4.8% to 5% and inflation would moderate at about 1.7% to 2% during that time span.

The forecast for 2009 was far less rosy. The Fed expects gross domestic product to decline by 0.5% to 1.3% in 2009, and the unemployment rate to rise to 8.5% to 8.8%. GDP fell by 3.8% in the fourth quarter of 2008, and unemployment stands at a 17-year high of 7.6%.

There’s no question the American consumer is hurting in the face of a burst housing bubble, financial market meltdown and rising unemployment.

But “the worst is yet to come,” according to Howard Davidowitz, chairman of Davidowitz & Associates, who believes American’s standard of living is undergoing a “permanent change” – and not for the better as a result of:

• An $8 trillion negative wealth effect from declining home values.
• A $10 trillion negative wealth effect from weakened capital markets.
• A $14 trillion consumer debt load amid “exploding unemployment”, leading to “exploding bankruptcies.”

“The average American used to be able to borrow to buy a home, send their kids to a good school [and] buy a car,” Davidowitz says. “A lot of that is gone.”