Fed: Employment Recovery Will Be Slow

The Federal Reserve expects unemployment will stay high over the next two years because recession-scarred Americans are likely to stay cautious, making for only a moderate-paced economic recovery.

Fed policymakers said in a forecast released Wednesday that it will take "some time" for the economy and the jobs market to get back to normal. They did not spell out how long that would be. Previously they suggested it could take five or six years for economic conditions to return to full health. A "sizable minority," however, thinks it could take more than five or six years for the economy and the job market to return to normal.

In updated economic projections, the Fed said the unemployment rate this year could hover between 9.5 percent and 9.7 percent. Next year, it will drop to between 8.2 percent and 8.5 percent. By 2012, the jobless rate will range between 6.6 percent and 7.5 percent.

Although those forecasts are little changed from projections the Fed had released in late November, the figures show that unemployment will remain elevated heading into this year's congressional elections as well as the presidential election in 2012. A more normal unemployment rate would be between 5.5 percent and 6 percent.

Fed policymakers "expect that the pace of the economic recovery will be restrained by household and business uncertainty, only gradual improvement in labor market conditions and a slow easing of credit conditions in the banking sector," according to the forecast.

Against that backdrop, the Fed expects the economy will grow between 2.8 percent and 3.5 percent this year. Growth will pick up to between 3.4 percent and 4.5 percent next year and log similiar growth in 2012. The economy would need to grow by at least 5 percent a year to make a dent in the unemployment rate, analysts say.

[decotoguy]

the American DREAM is LOST....I'm not one to POINT FINGERS at who did what to whom,but someone should explain to me how can a thin TAX BASE
support ALL that is happening TODAY?
In September of 1974 US STEEL Company had a NET PROFIT of 400 Millon
Dollars. The general opinion than was that 400 millon was excessive.
I'm afraid this Government CONSUME 400 MILLON DOLLARS DAILY,if that is so than with a little (FIZZY) MATH WE have ........... END GAME.....

[iirishamerican]

Employment will be slow. OK, understandable but is it suppose to be moving BACKWARDS? 2.1 million jobs lost from Feb 2009 to Jan 2010 whaoo! thats progress. 810,000 cunstruction jobs lost Feb 09 to Jan 2010.
837,000 manufacturing jobs lost.
Employment in the federal goverment excluding the post office is UP
113,200 jobs. Is that amazing or what? You didn't have to get an A in your 3rd grade math test to figure out this is not job creation maybe goverment jobs saved because they are in it to save their own a**es.

[presjfk]

The economy and jobs will slowly recover over years. Then as the economy fully recovers, oil will spike and drive the economy back to the brink of destruction. This is a cycle that many economists know is going to happen.

it is time to get off oil!

[askagain]

Although I do not blame President Obama for a poor economy, if it continues for two or more years, the chances of President Obama being reelected diminish greatly. Although unfair, presidents are blamed or glorified for the state of the economy although there is little they can do to really change it. People often oversimplify things and find it easier to simply blame or glorify the president although the economy is both massive and complicated.

[inketolstoy]

Good thing we passed that stimulus last year, or unemployment would be over 8%!

[ajvw]

lowering expectations