The Federal Reserve cut its outlook for the U.S. economy for this year (down from about 3.5% growth to 2.5%) and 2011 and projected that it could take several years for the economy to return to health.
According to minutes from the Fed’s November 3 meeting released Tuesday, more than half of the central bank’s policymakers thought it would take about five or six years for unemployment, growth and inflation to return to more normal levels. Other Fed members warned the full recovery could take even longer than that.
They are expecting unemployment to be 8% in 2012.
1. The central tendency excludes the three highest and three lowest projections for each variable in each year.
2. The range for a variable in a given year consists of all participants’ projections, from lowest to highest, for that variable in that year
The White House Office of Management and Budget projects 8.1 percent unemployment in 2012. So does the Congressional Budget Office. And those are the rosy scenarios. Other forecasters, from Goldman Sachs to the IMF, predict that the unemployment rate will be 10 percent in 2011 and only somewhat lower in 2012
No president since FDR has run for reelection with the unemployment rate above 8 percent. Reagan was re-elected with unemployment at 7.3%.