Fed More Upbeat on Economic Growth

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Federal Reserve officials were slightly more optimistic last month about economic growth for this year than they were in November, reflecting expected gains in consumer and business spending from tax cuts.

Fed officials said in an updated forecast released Wednesday that they think the economy will grow between 3.4 percent and 3.9 percent this year. That's an upward revision from their November forecast, which predicted gross domestic product will grow 3 percent to 3.6 percent.

The latest outlook foresees little improvement in the unemployment rate. The central bank predicts that the rate, now at 9 percent, will end the year at that level or possibly dip to 8.8 percent.

The Fed doesn't expect the slightly faster growth to trigger high inflation. Its latest forecast is for prices to rise 1.3 percent to 1.7 percent. That's only slightly more than its November projection, which expected consumer prices to increase 1.1 percent to 1.7 percent in 2011.

Chairman Ben Bernanke and others on the central bank's interest rate-setting panel remained cautious about how long it will take the economy to generate enough jobs to achieve normal unemployment. The Fed defines that level as 5 percent to 6 percent. The Fed said it would take five to six years to lower the rate that much.

In the minutes of the Fed's Jan. 25-26 deliberations, the central bank said unemployment would dip slightly to between 7.7 percent and 8.2 percent by the end of 2012 and to 6.9 percent to 7.4 percent by the end of 2013. Those estimates were little changed from November.

The Fed predicted that the GDP will expand 3.5 percent to 4.4 percent in 2012 and 3.7 percent to 4.6 percent in 2013. Both those forecasts were little changed from November.

In explaining its decision to boost the growth outlook for this year, Fed officials cited the tax-cut package Congress approved in December. That measure seeks to boost business investment through tax breaks for capital spending. It also renewed income-tax cuts and cut workers' Social Security taxes, boosting their take-home pay.

Fed officials also noted that since their November meeting, economic data showed that consumer spending, business investment and exports grew more strongly at the end of 2010 than had been expected.

The Fed's forecast of 3.4 percent to 3.9 percent GDP growth would compare with actual growth of 2.9 percent in 2010 as measured from the October-December quarter of the previous year.

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martinsportraits

Yeah ....there is really a lot to be upbeat about...lol.... .....If you ever had any doubts about how DUMB the powers that be think you are ...leave them here!

February 17 2011 at 4:10 PM Report abuse +1 rate up rate down Reply
flycozy

Another BS story from the AOL press. Their will be a recovery when hiring starts again. Talk Talk Talk and Hope and Change isn't working. Buy precious metals before the crash happens.

February 17 2011 at 4:06 PM Report abuse +1 rate up rate down Reply
wingsontime

the market? TIMBER!!!! THE MOENT THE TRUT COMES OUT.

February 17 2011 at 2:04 PM Report abuse +2 rate up rate down Reply
1 reply to wingsontime's comment
scottee

please, let's have the dollar back on the gold standard...and let's consider the Physicians for a National Health Program....pnhp.org....HR676...it's all spelled out and it makes sense....then The Fed needs to be audited and ended. they are doing no one any favors except themselves and congress.

February 17 2011 at 8:22 AM Report abuse +2 rate up rate down Reply
sfamilyent

Economists tend to focus on GDP as the primary economic measure, and it is good that they are thinking that GDP will rise more than what they previously forecasted.
I prefer to look at longer term trends like median income and poverty rate to gauge the strength of the economy. The income and poverty trend have not been good since Reagan, and I don't see that anything is going to change in the near future to fix that.

February 17 2011 at 7:10 AM Report abuse rate up rate down Reply
martinsportraits

What a ridiculous Bullsh*t story ............The US economy is on the skids and everyone knows it!!!!!!!!!!!!!!!!!

February 16 2011 at 10:27 PM Report abuse +3 rate up rate down Reply
ultraz2

FED knows that if intrest rates go up the intrest on the National Debt will go up as well. And the result will be that the USA GOES BANKRUPT SOONER RATHER THAN LATER.

February 16 2011 at 8:30 PM Report abuse +1 rate up rate down Reply
hustonlaw

Sounds like Mr. Bernanke believes that the inflation threat is "well contained". Now let's see, where have I heard that before.....?

February 16 2011 at 6:05 PM Report abuse +1 rate up rate down Reply
marine1942

So, the Fed says they were correct to keep lower rates and flood the market with cheap money. What did you think they would say. Really, really deep writer

February 16 2011 at 4:12 PM Report abuse +1 rate up rate down Reply