Today's FOMC statement added "sluggish income growth" to the factors constraining household spending. This factor comes right after ongoing job losses and pushes "lower housing wealth" to third place (tight credit is last). A few blogs ago (Wages & Employment -- The Problem With Low Inflation & A Strong Dollar) I noted that with actual year-over-year declines in wage and salary disbursements it appears that consumer spending is going to drag down overall growth for some time to come. The Fed has known this for a while, it is far from a state secret, so why mention it now?
I suspect they felt the need to more forcefully tell the inflation-scare crowd and the Fed funds traders looking for near 2% funds by year-end 2010 to calm down -- there is going to be plenty of time before any of these concerns come to bear. Ever since the 1987 stock market crash the Fed has consistently stayed too low for too long. Considering the much more dire economic troubles at present and that the "normalized" credit markets are only so because the Fed is still holding it together, I think it is fair to say that the Fed is going to stick with zero for a lot longer than markets think.