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Fed: Jobless rate will stay high through 2012
Federal Reserve officials predict unemployment will hover around 7 percent well into 2012 — lower than the nation's current rate of more than 10 percent, but still higher than is normal for a healthy economy.
Minutes from a previous Fed meeting also released on Tuesday further reveal its officials remain concerned the country could be entering a jobless recovery phase, a period in which the economy in general grows faster than the labor market.
However, board members also believe the economy will grow slightly more than they first anticipated, perhaps starting as early as the 2010 fiscal year.
But a second report issued Tuesday afternoon clarified that last quarter's economic growth was not as large as first estimated. Instead of growing by about 3.5 percent, as the White House first announced, the country grew at about 2.8 percent, according to the Fed.
Ultimately, the numbers taken together are likely to galvanize both parties' lawmakers, who have fought intensely over the past few weeks about the need for additional economic recovery measures.
Democrats are pursuing a bill that would effectively function as a "job stimulus," following the party's previous effort to extend unemployment benefits.
Details of that legislation remain ambiguous, but its most vocal advocates are likely to cite Tuesday's data as evidence in what is sure to be an intense floor debate over the measure.
Republicans, however, are sure to charge that the Fed's latest projections demonstrate lawmakers' previous efforts — namely, the federal stimulus — are not working. Many GOPers previously carped that the country's growth in GDP, in particular, occurred only as a result of the cash-for-clunkers program, not because of the federal stimulus. That argument may surface again if GDP growth in the next quarter drops off even slightly.
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