Fed Lowers Its Forecast for Growth, but Takes No Steps
>> Thursday, November 3, 2011
WASHINGTON — The Federal Reserve significantly reduced its forecast of economic growth through 2013, acknowledging that it had once again overestimated the nation’s recovery from the 2008 financial crisis.
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Despite the bleak forecast, however, the Fed said that its policy-making committee had decided against taking new measures to stimulate growth at a two-day meeting that concluded Wednesday. The Fed’s chairman, Ben S. Bernanke, said that the central bank already was pushing hard to spur growth and create jobs.
“We have taken a lot of actions,” Mr. Bernanke said at a news conference after the announcement. He added that Congress, by contrast, was not doing enough to pull the levers of fiscal policy. Lawmakers are gridlocked over a new jobs proposal from the White House, and a special bipartisan committee charged with reducing the deficit is struggling to reach agreement by Thanksgiving.
“I think it would be helpful if we could get assistance from other parts of the government to help create more jobs,” Mr. Bernanke said.
The central bank predicted that the economy would expand 2.5 percent to 2.9 percent in 2012, well below its June projection of 3.3 percent to 3.7 percent. For the following year, 2013, the Fed predicted growth of 3 percent to 3.5 percent, down from a range of 3.5 percent to 4.2 percent.
The unemployment rate, it predicted, would still be at least 8.5 percent at the end of 2012, at least 7.8 percent at the end of 2013 and at least 6.8 percent at the end of 2014. Such reductions probably would come in part from people abandoning the search for work, rather than those finding new jobs.
The unemployment rate was 9.1 percent in September. The government will release October figures on Friday.
This is a difficult time for the Fed and its chairman. Republicans charge that the central bank’s existing efforts have gone too far, sowing future inflation. Democrats say that in hesitating to do more, the Fed is ignoring the plight of more than 25 million Americans who cannot find full-time work. And the sluggish pace of growth, which continues to fall short of the Fed’s predictions, is a bright marker of its failure to stimulate a recovery.
Mr. Bernanke on Wednesday sought to argue that the Fed was trying to get things just right in maintaining a delicate but necessary balance between competing concerns about inflation and unemployment. He said that Republican critics were ignoring the Fed’s record. Five years into the crisis, there is no sign of inflation.
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Multimedia
Despite the bleak forecast, however, the Fed said that its policy-making committee had decided against taking new measures to stimulate growth at a two-day meeting that concluded Wednesday. The Fed’s chairman, Ben S. Bernanke, said that the central bank already was pushing hard to spur growth and create jobs.
“We have taken a lot of actions,” Mr. Bernanke said at a news conference after the announcement. He added that Congress, by contrast, was not doing enough to pull the levers of fiscal policy. Lawmakers are gridlocked over a new jobs proposal from the White House, and a special bipartisan committee charged with reducing the deficit is struggling to reach agreement by Thanksgiving.
“I think it would be helpful if we could get assistance from other parts of the government to help create more jobs,” Mr. Bernanke said.
The central bank predicted that the economy would expand 2.5 percent to 2.9 percent in 2012, well below its June projection of 3.3 percent to 3.7 percent. For the following year, 2013, the Fed predicted growth of 3 percent to 3.5 percent, down from a range of 3.5 percent to 4.2 percent.
The unemployment rate, it predicted, would still be at least 8.5 percent at the end of 2012, at least 7.8 percent at the end of 2013 and at least 6.8 percent at the end of 2014. Such reductions probably would come in part from people abandoning the search for work, rather than those finding new jobs.
The unemployment rate was 9.1 percent in September. The government will release October figures on Friday.
This is a difficult time for the Fed and its chairman. Republicans charge that the central bank’s existing efforts have gone too far, sowing future inflation. Democrats say that in hesitating to do more, the Fed is ignoring the plight of more than 25 million Americans who cannot find full-time work. And the sluggish pace of growth, which continues to fall short of the Fed’s predictions, is a bright marker of its failure to stimulate a recovery.
Mr. Bernanke on Wednesday sought to argue that the Fed was trying to get things just right in maintaining a delicate but necessary balance between competing concerns about inflation and unemployment. He said that Republican critics were ignoring the Fed’s record. Five years into the crisis, there is no sign of inflation.
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Definitely, a difficult time for the Fed and its chairman. :(
@Liz: Thanks. I need to put more content on this blog for it to become beneficial to my part and to all who are following this.
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