Fed projections show smaller economic hit from virus in 2020 By


© . FILE PHOTO: Federal Reserve Board building on Constitution Avenue is pictured in Washington


WASHINGTON () – The U.S. Federal Reserve boosted its view of the American economy’s recovery from the coronavirus crisis on Wednesday, projecting the pandemic will take a slightly smaller bite from the economy this year with three years of steady growth to follow.

In new economic projections released along with the U.S. central bank’s latest policy statement, Fed policymakers at the median see economic growth dropping by 3.7% this year, an improvement from the 6.5% drop projected in June.

Policymakers at the median also projected the unemployment rate will fall to 7.6% by the end of the year, well below the 9.3% jobless rate seen when Fed officials last issued projections in June.

The updated projections coincided with a shift in tone by the U.S. central bank and chair Jerome Powell that portrayed the country as gradually learning to accommodate a persistent health crisis and go about much of its business.

Things are by no means business as usual. Powell noted U.S. jobs markets are a “long way” from normal, and that large numbers of workers may be sidelined in industries like hospitality and leisure that face particular challenges in operating while the disease is still being spread.

But Fed policymakers also took note that the formal jobless rate has fallen faster than initially expected. The median policymaker projection sees the unemployment rate at 5.5% by the end of 2021 and 4.6% by the end of 2022 — still high compared with last year’s record low levels but more in line with past U.S. experience.

Inflation is expected to remain below 2% until 2023. The Fed last month unveiled a new strategy that pledges to lift inflation above the 2% level to make up for years of undershooting that target.

(This story corrects to add missing word to headline)

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.