Federal Reserve upgrades economic forecast

2/21/2011

Boding well for small businesses affected by the credit crunch, the Federal Reserve has substantially upgraded its economic growth forecast, the New York Times reports.

The organization predicts that the output of goods and services will grow by 3.4 to 3.9 percent this year, up 0.3 percentage points from its November forecast. This will be the fastest year-over-year growth since 2004, if the Federal Reserve's predictions come true.

However, the group's unemployment expectations remain consistent with its November report, declining only 0.1 percent. The Federal Reserve anticipates that unemployment will hover around between 8.8 and 9 percent this year.

"The Fed said it based its expectations on an improvement in consumer spending in the fourth quarter, though Fed officials were uncertain how long that would last, according to minutes of the Fed’s last policy meeting in late January, released on Wednesday," notes the source.

According to a recent report from the National Retail Federation, consumers are expected to shop more in 2011. The group predicts that spending will grow by 4 percent this year.