Fed: Slower Growth, Higher Unemployment in 2012

June 20, 2012 - 3:51 PM
Wall Street Federal Reserve

The decision of the Federal Reserve is visible on a television monitor at the trading post of specialist Michael Guli, on the floor of the New York Stock Exchange Wednesday, June 20, 2012. The Federal Reserve is extending a program designed to drive down long-term interest rates to spur borrowing and spending. (AP Photo/Richard Drew)

(CNSNews.com) The Federal Reserve projected that slower economic growth and higher unemployment would continue for the remainder of the year Wednesday, revising its forecasts downward from its April projections.

The Fed projected that GDP growth would be between 1.9 to 2.4 percent in 2012, a downward revision from its April projection of growth between 2.4 to 2.9 percent.

Unemployment is now expected to be worse than was projected in April, with the unemployment rate for 2012 now thought to be between 8.0 to 8.2 percent, up from the 7.8 to 8.0 percent the Fed forecast in April.

The projections reflect what the Fed terms its central tendency – the middle of a range of predictions about the economy – excluding the three highest and three lowest predictions.

In all, the Fed predicts that GDP growth could fall to as low as 1.6 percent in 2012 and go as high as 2.5 percent.

Likewise, the full forecast for unemployment is between 7.8 percent and 8.4 percent.

The negative revisions to its April forecast reflect the slowdown in economic and job growth seen over the first half of 2012 and reveal that the Fed does not expect the economy or the job market to improve this year.

The Fed also projected that inflation would remain low, staying below the targeted rate of 2.0 percent.