Fed Grows Gloomier on US Growth and Unemployment

Posted November 2nd, 2011 at 4:30 pm (UTC-5)
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Top officials of the U.S. central bank are predicting “moderate” growth for the U.S. economy, but caution that expansion will be slower and unemployment worse than estimates they published in June.

Federal Reserve Chairman Ben Bernanke says the downbeat reports are one reason that he and many other Americans are disappointed with the economy's performance.

Wednesday's revision of the Federal Reserve forecast says the economy will expand between 2.5 and 2.9 percent 2012. Fed officials also say the U.S. jobless rate will decline to around 8.6 percent by the end of next year.

At the end of a key policy meeting, the central bank kept interest rates steady at their record low levels after noting that inflation has eased recently. If inflation becomes a threat, the Fed will probably raise interest rates to cool the economy and restrain prices. But officials do not want to do that too soon because the current low interest rates are intended to help boost growth in the economy.

A separate report said U.S. private sector payrolls rose 110,000 in October, with much of the gain in the services sector of the economy. The information comes from ADP, a company that processes millions of paychecks for businesses across the nation.

The data may be a preview of Friday's closely-watched report on the unemployment rate, which many experts predict will stay steady at a relatively high 9.1 percent. Economists surveyed by news organizations say the economy will probably also see a net gain of 95,000 jobs.