Wake Up America:Fed’s economic forecast worsens (They have been lying to you)
he Federal Reserve’s latest forecasts for the U.S. economy are gloomier than the ones released three months earlier, with an expectation for higher unemployment and a steeper drop in economic activity.The Fed’s forecasts, released as part of the minutes from its April meeting, show that its staff now expects the unemployment rate to rise to between 9.2% and 9.6% this year. The central bank had forecast in January that the jobless rate would be in a range of 8.5% to 8.8%, but the unemployment rate topped that in April, hitting 8.9%.
The Fed also now expects the gross domestic product, the broadest measure of the nation’s economic activity, to post a drop of between 1.3% and 2% this year. It had previously expected only a 0.5% to 1.3% decline.
At the April meeting, the Fed decided to once again leave its key federal funds rate near 0%, a level it has been at since last December. The central bank also announced that it did not plan on increasing purchasing more long-term Treasury notes anytime soon.
The Fed disclosed plans to begin buying $300 billion’s worth of such Treasurys in March in order to try and keep long-term rates down and boost economic activity.
But according to the minutes, some members of the central bank’s policy committee indicated they were open to increasing its purchases of Treasury notes and mortgage securities as a way of spurring more lending.
Treasury prices rallied after the minutes were released, pushing their yield, which moves in the opposite direction, down to 3.18%.
Stocks, which have moved sharply higher during the past two months on hopes that the recession may soon be ending, fell Wednesday afternoon.
According to the minutes, Fed members did indicate they expected GDP to increase slightly in the second half of this year. However, it would not be enough to overcome the anticipated declines in the first half. GDP shrunk more than 6% in the first quarter.
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