Federal Reserve policymakers readjust economic outlook

As the nation's economy improved during the first part of the year, Federal Reserve policymakers made modest upward projections for the remainder of the year. 

The Fed predicted more robust growth in the nation's gross domestic product along with a slightly better employment picture, according to the Federal Open Market Committee's April 27-28 minutes, released today. 

GDP projections increased by 3.2 to 3.7 percent, up from the 2.8 to 3.5 percent estimated in January. The unemployment rate also improved slightly, to between 9.1 and 9.5 percent from 9.5 to 9.7 percent. The Fed expects the jobless rate to improve in 2011 to between 8.1 and 8.5 percent, slightly revised from estimates earlier this year, with job growth expanding through 2012. 

Although the job market was improving, the Fed cautioned that job growth would likely remain moderate.

Consumer spending, labor productivity and business outlays for equipment and software were seen as broadly consistent with a moderate pace of economic recovery, according to the minutes of the meeting attended by the 12 presidents of the regional Federal Reserve banks and five members of the Fed's Board of Governors. 

Inflation also should remain subdued through the rest of the year, officials said. 

Many participants pointed to stronger incoming data reflecting a rooting economic recovery than had been the case in January, but cautioned the financial crisis and recession made predictions difficult. 

Appropriate monetary policy decisions and improving conditions of financial markets and institutions should contribute to continued economic expansion, the minutes said. 

Strains in the commercial real estate sector could impair the ability of banks to lend money, restraining the growth of output and employment.