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Economic recovery is slower than expected

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Federal Reserve leaders say the U.S.' economic recovery is progressing slower than what they forecast in the spring, but they believe the slowdown does not require new policy actions, according to The Washington Post. However, they have agreed to explore options to help support the economy in case conditions become worse.

Fed officials forecast that gross domestic product will grow 3 percent to 3.5 percent this year compared with 3.2 percent to 3.7 percent forecast at their April meeting. They also expect the unemployment rate to be 9.2 percent to 9.5 percent in the fourth quarter of 2010 and 8.3 percent to 8.7 percent at the end of 2011; this is slightly higher than the Fed's April forecast.

Regarding inflation, the Fed expects prices to rise 1 percent to 1.1 percent this year compared with 1.2 percent to 1.5 percent forecast in April.

Although Fed officials have lowered their expectations for economic growth and additional weak economic data have confirmed economic growth is slowing, they still expect continued economic recovery. They believe financial markets have become an issue—mainly because of economic troubles in Europe—but seem to place greater weight on data demonstrating strength in the business sector, such as increased investment in equipment and software.


7/20/2010

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