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Fed Lowers Estimate for 2013 GDP Growth

By Justin Loiseau - Sep 18, 2013 at 3:35PM

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Unemployment rate predicted to continue to decline.

The Federal Reserve released its latest economic estimates (link opens in PDF) today, easing back on GDP growth optimism but holding fast on the unemployment outlook.

After releasing its last projections in June, the Fed now generally expects 2013 real GDP to edge up 2% to 2.3%, compared to a 2.3% to 2.6% growth estimate in June. The Fed also predict growth will be slightly slower than previously expected in 2014, between 2.9% and 3.1%, compared to prior predictions of 3% to 3.5%. These numbers reflect the Fed's "central tendency," which excludes the three highest and lowest projections.

Source: Federal Reserve. 

While GDP growth estimates took a hit, expectations for the unemployment rates are generally in line with June's report. The rate for this year is expected to clock in between 7.1% and 7.3%, putting the bottom estimate 0.1 percentage point lower than the previous prediction. The unemployment rate is currently 7.3%.

2014 should see unemployment rates drop to between 6.4% and 6.8%, the Fed now estimates, while the Fed expects 5.9% to 6.2% rates for 2015.

Source: Federal Reserve. 

Inflation, a metric that's kept fairly on track throughout the Great Recession and recovery, doesn't look to be starting any problems now. From a 2013 range of 1.1% to 1.2%, rates are expected to edge up to as much as 2% by 2016, the Fed's long-run target amount.

Source: Federal Reserve. 

Fool contributor Justin Loiseau has no position in any stocks mentioned. You can follow him on Twitter @TMFJLo and on Motley Fool CAPS @TMFJLo.

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