At the conclusion of a lunch at the British embassy here in Washington, Britain’s ambassador, Sir Peter Westmacott, asked each of the four scribbler-economists he had invited to give his forecasts for the year. I usually decline to participate in this sport, but after hearing the unoptimistic views of the other guests, I found myself offering to buy lunch for Sir Peter and his other guests if the U.S. economy is not growing at a rate of at least 3 percent by the end of this year. After a recent, brief tour of the country—St. Louis, Houston (fastest growing job market), Phoenix (fourth fastest)—and chats with builders, retailers and business leaders in those cities and elsewhere, I sufficiently overcame my aversion to forecasting to make a safe, although hardly risk-free bet.

Federal Reserve Board chairman Ben Bernanke and his monetary policy committee’s decision to run the printing presses is having the desired “wealth effect.” Unless the job market improves markedly, taking the unemployment down from 7.5 percent to 6.5 percent without a further increase in the number of workers too discouraged to remain in the work force, Bernanke will hold steady-as-she-goes, purchasing $85 billion per month in bonds to keep interest rates close to zero. If the economy gains steam, the Fed will dial back the speed of its money printing, and if the economy slows too much the dial will be twisted back to full-speed ahead. Whether the Fed’s dials are connected to the real economy, or merely tools to satisfy the Fed’s belief in its power and skill, is an open question. The possibility that hubris precedes nemesis rarely troubles Fed chairmen.