The Washington Post’s Neil Irwin and Renae Merle relay a bleak Federal Reserve report on economic recovery: there is a small chance of a jobless recovery. And even if that scenario doesn’t happen, what is likely is that unemployment will still be between 6.8-7.5 percent by late 2012.

What’s odd reading about this report is that this is not the work of academics or a think tank or a government watchdog. This was done by a federal agency with the power to change the economic conditions it forecasts. I think it’s difficult to buy the argument that the Fed has done all they can, what with interest rates basically zero. They gave trillions of dollars to stabilize the big financial firms at the center of the economic crisis. This has made the economy less worse. But it hasn’t lead to job creation: if the Fed wants to maintain its controversial role at the center of American economic policy, it needs to think about more than just the health of banks but the relationship between monetary policy and the labor market.

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