Former FOMC adviser Vince Reinhart now sees the Fed using communications strategy to ease policy before increasing accommodation. As recently as a week ago he was firmly in the QE3 camp… And I thought Gerry was schizophrenic…
The US faces unfinished business from the global financial crisis, he says, including headwinds from Europe and the fiscal cliff (presumably the expiration of the Bush tax cuts next January, along with a rise in the payroll tax and new taxes linked to Obama care. Rinehart see a 5% contraction in 2013 if all the tax hikes come into play.