Federal Reserve cuts US growth forecasts as recovery falters
America’s economic recovery will be weaker than feared next year and do little to bring down unemployment until at least 2013, according to new forecasts from the Federal Reserve.
By Richard Blackden
23 Nov 2010
The world’s biggest economy will grow between 3pc and 3.6pc, less than the Fed’s June forecast of 3.5pc to 4.2pc. In turn, unemployment, currently 9.6pc, will only edge lower to between 8.9pc and 9.1pc next year. In June, the central bank had forecast it would dip below 9pc in 2011.
The new forecasts were revealed in the minutes of the meeting of the Fed’s Open Market Committee, when it decided to inject a further $600bn (£509bn) into the economy. The decision proved controversial at home and abroad, where it was criticised by some as a reckless way to lift exports and inflation by weakening the dollar. The minutes acknowledged that the latest forecasts were based on a lower dollar, as well as higher share prices.
The sluggishness of the recovery has already seen the Republicans wrest control of the House of Representatives from the Democrats and spark a fierce debate over how to restore the country’s economic health.