The Federal Reserve issued a bleak assessment of the economy today, predicting weak growth and rising unemployment this year. Fed officials expect the economy to grow between 1.3% and 2% in 2008, the slowest in five years, the New York Times reports. A separate report today showed consumer prices rising, putting the Fed in a tricky spot as it weighs another rate cut against fears of inflation.
The Fed's growth forecast is a sharp drop from a range of 1.8% to 2.2% issued in the fall. The forecast, a consensus of Fed governors and regional bank presidents, also predicts unemployment will range from 5.2% to 5.3%, up from the projection of 4.8% to 4.9% in October, USA Today notes.