Drawing meaning from the Fed's fcast

So what did we learn yesterday from the Fed's forecast release of economic data.  Select here for the full release of the Fed's forecast.

1. GDP was revised down from 2012 through 2014 vs. April's projection.  
2. Unemployment was revised up from April's projection from 2012 through 2014
3. Inflation projections were lowered vs. April for 2012 through 2014

So what does this mean?  Continued weakness and an economy that could e teetering on entering another recession.  Deflation still seems like the concern of the day vs. inflation although with the money printing that the US has done throughout the financial crisis many are still scared of rapid inflation.  

We've since increases in the prices of things that America use and buy the most.  Think education, gas, oil, and food.  Why I love the fact that the price of a Mac Air has not increased while gaining additional options or storage it doesn't help Americans fill their gas tanks.

Today we received further data that China is slowing with it's PMI reaching a 7 month low at 48.1.  Courtesy of Mish Shedlock see the chart below which supports a slowing Chinese economy.

With Europe in a recession and China slowing it is only a matter of time before it catches up to us in the US. Remember we are a more inter-connected world than most people think.  A decoupling strategy has not really worked in the past not do we believe that it will work in the future.