Fed sees weaker recovery for economy through 2011
The Federal Reserve said the economy will be weaker than it initially forecast through 2011, though the central bank still expects the recession to end this year.
Welcome signs that the economy’s decline slowed in April, along with hopes for the government’s stimulus spending, caused the Fed’s staff to upwardly revise its growth estimate for the second half of this year. But the sharp first-quarter shrinkage at an annualized rate of 6.1%, and the continued decline in the current quarter, led the Fed to trim its full-year forecast.
The Fed now expects the economy to contract by 1.3% to 2% this year, worse than the 0.5% to 1.3% fall it projected in January, according to minutes of the April 28-29 meeting of the policymaking Federal Open Market Committee released Wednesday. By 2010, the Fed anticipates growth of up to 3% and as much as 4.8% in 2011. That’s also lower than its January outlook.
“This recovery is stretching further and further out,” said Doug Roberts, chief investment strategist of Channel Capital Research.
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