Monday, February 23, 2009

New Fed Numbers

Last week, the Federal Reserve announced updated figures concerning the direction of the U.S. economy. Alarmingly, Ben Bernanke announced it is "very likely" the unemployment rate will be above 8% soon. Most Fed officials project unemployment to reach 9% by the end of 2009.

The Fed revised previous positions and stated the U.S. economy will contract by .5 - 1.3% in 2009 (the previous estimate was a contraction of .2 - 1.1%). Additionally, the Fed anticipates inflation rates to average between 1.5 - 2% as the economic decline shifts into recovery mode. This has some Fed officials worried about the risk of deflation.

However, Bernanke's speech wasn't all doom and gloom. On the positive side, the Fed stated the U.S. GDP is expected to increase by 2.5 - 3.3% in 2010, and by 3.8 - 5% in 2011. It seems the Federal Reserve sees a U.S. recovery in the cards.

No comments: