NEW YORK – The Federal Reserve slashed its projection for gross domestic product, while raising its expectations for the unemployment rate, according to data released Wednesday.
The Fed now sees GDP central tendency to be 1.6% to 1.7% growth this year, down from its previous call for 2,7% to 2.9% growth this year, while slashing 2012 estimates to 2.5% to 2.9% from 3.3% to 3.7%, and cutting 2013 to 3.0% to 3.5% from 3.5% to 4.2%. GDP is seen growing 3.0% to 3.9% in 2014. The central tendency excludes the three highest and three lowest projections.
The estimated range, which doesn’t exclude any projections, for this year now runs 1.8% to 1.9% (compared to 2.5% to 3.0% in the previous estimate), 2.3% to 3.5% growth in GDP next year, and 2.7% to 4.0% in 2013.
The unemployment rate is seen at 9.0% to 9.1% for this year, up from 8.6% to 8.9% in the previous estimate, 8.5% to 8.7% next year (compared to 7.8% to 8.2%) and 7.8% to 8.2% in 2013 (compared to 7.0% to 7.5%).
Inflation, measure by personal consumption expenditures, are seen at 2.7% to 2.9% this year (up from 2.3% to 2.5%), 1.4% to 2.0% next year (compared to 1.5% to 2.0%), and 1.5% to 2.0% in 2013, unchanged from three months ago.
When excluding food and energy prices, consumption is seen at 1.8% to 1.9% this year (compared to 1.5% to 1.8%), 1.5% to 2.0% next year (compared to 1.4% to 2.0%), and 1.4% to 1.9% in 2013 (compared to 1.4% to 2.0%).
