Outlook for 2010 economy brightens
AP Economics Writer
Vail, CO Colorado
WASHINGTON – Federal Reserve officials have a slightly brighter view of the economy than they did at the start of the year.
Fed officials said Wednesday in a new forecast that they think the economy can grow between 3.2 percent and 3.7 percent this year. That’s an upward revision from a growth range of 2.8 percent to 3.5 percent in their January forecast.
The Fed’s latest forecast sees the unemployment rate, now at 9.9 percent, dipping to between 9.1 percent and 9.5 percent by year’s end. In the January forecast, the Fed didn’t think unemployment would dip below 9.5 percent this year. The Fed prepared the latest forecast for its late-April meeting.
The officials predict that a measure of inflation tied to a gauge of consumer spending – excluding volatile food and energy costs – will rise just 0.9 percent to 1.2 percent this year. That’s below the January estimate of an increase in prices of 1.1 percent to 1.7 percent.
The new outlook represents the middle range of forecasts of officials on the Federal Open Market Committee. That’s the group of Fed board members and central bank presidents who meet eight times a year to set interest rates.
At four of those meetings, including the April session, the central bank updates its economic outlook.
The Fed left its forecasts for next year and 2011 and the longer-run expectations mainly unchanged from January.
The Fed described the changes in economic growth in 2010 as a “modest” upward revision. The minutes said the figures available for the April meeting on consumer spending and business outlays were “broadly consistent with a moderate pace of economic recovery.”
But the Fed stressed that the economic recovery is expected to remain moderate, with the unemployment rate falling only gradually.
“Participants continued to expect the pace of the economic recovery to be restrained by household and business uncertainty, only gradual improvement in labor market conditions and slow easing of credit conditions in the banking sector,” the Fed minutes said.