Let's Twist Again?

The Federal Reserve meets this week, giving them a chance to act for the first time since chairman Ben Bernanke made his much-anticipated speech at Jackson Hole last month. Prior to that address, many economy-watchers predicted a return to a strategy called Operation Twist. It didn't happen then, but we may see the strategy announced this week. Rumor has it that Bernanke needed the extra time to arm-twist some of his Fed governors into going along with the strategy.

Would Operation Twist make much difference? According to the economic forecasters at Macroeconomic Advisors, it could be significant. They estimate that Operation Twist alone could add 0.4 percentage points to our GDP, and create 350,000 jobs. That's on top of whatever natural growth we see.

Of course, economic forecasts are a dime a dozen. But with the Fed adding an extra day to its normal meeting time this week, don't be surprised if something truly dramatic happens this week.