Slow growth expected for US economy
The US Federal Reserve has painted a bleaker outlook for the nation's economy, which it thinks will grow much more slowly and face higher unemployment than it had estimated in June.
The Fed now predicts the economy will grow at a scant 1.6% to 1.7% for 2011. For 2012, it thinks growth will range between 2.5% and 2.9%. Both forecasts are roughly a full percentage point lower than its June forecast.
The Fed sees unemployment of between 8.5% and 8.7% next year, which compares to its forecast made in June of unemployment dropping in 2012 to as low as 7.8%. The rate is now 9.1%.
Even so, the Fed said after its policy meeting that the economy had improved since nearly stalling in the spring. As a result, it is putting off any new actions so it can gauge the impact of steps already taken.
Fed policymakers made the announcement after a two-day meeting. In a statement, the officials said consumers have stepped up spending. Still, they said the economy continues to face significant risks, including the debt crisis and risk of recession in Europe.
The Fed left open the possibility of taking further steps later to try to boost the sluggish economy, but it gave no hint as to what those moves might be.
"They're noting the better growth numbers but remain pretty cautious," said Michael Feroli, a former Fed economist now with JPMorgan Chase. "They're not celebrating by any means, which probably is appropriate."
Some analysts said they expected the Fed to take further action to support the economy at coming meetings, given their expectation that growth will remain sub-par.
Federal Reserve chairman Ben Bernanke acknowledged the pace of US economic growth is likely to be "frustratingly slow". Mr Bernanke cited the debt crisis in Europe as a particular concern, saying it could have adverse effects on confidence and growth. As a result, the central bank is closely monitoring the situation, he said.
When asked if the Fed would purchase more mortgage-backed securities to help the depressed housing market, Mr Bernanke said that was a "viable option", but declined to say if, or when, the Fed would pursue such action.