The Fed now projects the economy to grow as little as 0.3 percent this year, a full point lower than it’s previous estimate, and raised its inflation estimate by a point. It says unemployment could reach as high as 5.7 percent, up from the current 5 percent, the WSJ reports on A3.

Here’s the NYT:

In the minutes, Fed officials also noted that banks and mortgage lenders had tightened lending standards and “credit conditions were seen as remaining tight.” They said that the housing slump appeared far from its nadir and that the problems in that market would continue to weigh on the overall economy.

Wages also stagnated in April, and several officials said they believed that the weak labor market would keep salaries low. Average salary growth has failed to keep pace with inflation.

Moody’s smacked around after computer-bug story

Moody’s shares plummeted 16 percent yesterday on the FT’s excellent scoop that a computer bug caused it to overrate certain debt securities, something the credit-rating firm discovered last year and proceeded to cover up. That means investors fear severe repercussions from the news.

The FT fronts the fallout from its constant-proportion debt obligations story, writing that Senator Chuck Schumer of New York is calling for an investigation by the Securities and Exchange Commission and that Moody’s has hired a law firm to investigate it. The Journal on C12 says the SEC is “reviewing the situation,” but the NYT says the SEC chairman told reporters it doesn’t have jurisdiction over the matter. The NYT also says the Connecticut attorney general is investigating.

The WSJ says midway through its story that “data integrity has been an issue before,” quoting a former Moody’s analyst who says it found a similar problem with a deal in the 1990s but decided to cover up the problem rather than downgrading the securities like it should have.

The NYT says the Moody’s CPDO news “raises new questions about the credibility of its assessments.”

Until now, the major criticism of ratings firm was that they were not skeptical enough in how they rated mortgage securities and that they used flawed assumptions in evaluating the investments.

“This is a whole different thing entirely,” said Janet Tavakoli, a financial consultant who raised concern about the types of securities Moody’s rated earlier this year. “Now it makes you wonder what else was going on.”

You’ll stop smoking, but you may have a heart attack!

A Pfizer antismoking drug called Chantix came under increased scrutiny after a nonprofit group linked it to a thousand “serious incidents.” The Food and Drug Administration promptly banned its use by pilots and air-traffic controllers. The Times says there are 150 pilots and thirty air-traffic controllers the FDA knows are using the drug, comforting news to those of us who have to fly this weekend.

The serious incidents “include accidents and falls, potentially lethal heart rhythm disturbances, heart attacks, seizures, diabetes and various psychiatric disturbances,” the NYT says on C3, and the drug has already been linked to increased risk of suicide. The Journal reports on B1 that the FDA says its staffing shortage means it can’t investigate all the problems and is just focusing on the psychiatric ones.

It may be time to just yank this one, though we wonder how this compares to other quit-smoking drugs:

After just months on the market, Chantix broke into the small group of medicines with more than 100 reports of serious injury. In the 2007 fourth quarter, with nearly 1,000 reports, it topped the group’s list of 769 drugs examined in the U.S. for serious side effects. By contrast, the median number of serious-injury reports for other drugs is five. Most medications that came close to Chantix carry the FDA’s most-serious “black box” warning, the study says.

Criminal charges likely in Jefferson County mess?

Bloomberg goes very long with a look at the Jefferson County, Alabama, story, which only gets more interesting.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.