US pace of employment, consumer spending have slowed – Fed

20 June 2012 20:00  [Source: ICIS news]

WASHINGTON (ICIS)--The Federal Reserve said on Wednesday that the pace of US employment growth and household spending have slowed, the housing sector remains depressed and economic growth likely will be only moderate through this year.

In addition, the Fed – the US central bank – cautioned that the ongoing eurozone sovereign debt crisis and “strains in global financial markets continue to pose significant downside risks to the economic outlook”.

Because it expects US economic growth will “remain moderate over coming quarters and then pick up very gradually”, the Fed expects that the nation’s “elevated unemployment rate will decline only slowly”.

The US jobless rate edged back up to 8.2% in May after declining at the end of 2011 and earlier this year. The unemployment rate has been above 8% for 40 months.

The Fed’s rate-setting Federal Open Markets Committee (FOMC) again reiterated that the central bank anticipates that its record-low federal funds interest rate of 0%-0.25% will remain at that level “at least through late 2014”.

The rate has been at that unprecedented low level since December 2008.

The Fed also said that it would continue until year end its existing policy of purchasing more long-term securities, a plan meant to keep interest rates low.

However, the central bank did not take any further actions aimed at stimulating the nation’s still sluggish recovery.

Many analysts had forecast that in light of May’s gain in unemployment, lower consumer spending and other disappointing economic news, the Fed might take steps to accelerate growth.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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