Fed Sees Slower Growth, Higher Unemployment

Reserve officials sharply reduce economic forecast
By John Johnson,  Newser Staff
Posted Feb 20, 2008 6:58 PM CST
Federal Reserve Board Chairman Ben Bernanke appears before the Senate Banking Committee on Capitol Hill in Washington, Thursday, Feb. 14, 2008, to discuss the state of the economy. (AP Photo/Dennis...   (Associated Press)
camera-icon View 1 more image

(Newser) – 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.