Fed Changes Growth, Employment Forecast for the Worse

Posted on Nov 2, 2011

Flickr / clementine gallot (CC-BY)

Back in June, the Federal Reserve predicted a sunnier economic future for the U.S. than it did Wednesday, when the Fed released revised figures for both growth (it’ll happen more slowly) and unemployment (it’ll continue to hover around 9 percent) through 2012. But the news wasn’t all gloomy, as The Washington Post relayed that day.  —KA

The Washington Post:

The central bank’s latest forecast released Wednesday predicts that the economy will grow just 1.6 percent to 1.7 percent for all of 2011. For 2012, growth will range between 2.5 percent and 2.9 percent. Both forecasts are roughly a full percentage point lower than the Fed’s projections from June.

The unemployment rate has been stuck near 9 percent for more than two years. The Fed doesn’t see that changing this year. It predicts it will fall between 8.5 percent and 8.7 percent next year. In June, the Fed had predicted unemployment would drop next year to as low as 7.8 percent.

[...] Since then, the outlook has improved slightly. The government last week said the economy grew at an annual rate of 2.5 percent in the July-September quarter, the best quarterly growth in a year. That was largely because consumers increased their spending at triple the rate from the previous quarter.

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