Federal Reserve downgrades growth forecast for the rest of 2011
Bernanke's comments came as the Fed lowered its forecast for growth and raised its expectation for unemployment this year. The weaker outlook and Bernanke's acknowledgment that some of the problems may persist into 2012 suggested that the Fed recognizes the economy is struggling.
"The Fed is well aware now that the economy has slowed," said Lyle Gramley, senior economic adviser with Potomac Research Group. "They are not at all sure where the economy is going."
The Fed's downward revisions were in line with private economists, who have also been scaling back their forecasts to reflect a batch of weaker-than-expected reports in recent weeks. The latest poll of top economists surveyed by The Associated Press showed they expect the unemployment rate will be 8.7 percent at year's end, within the Fed's new estimate, and that the economy will grow 2.6 percent this year.
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