U.S. unemployment rate will fall to 4.5 percent this year, inflation will rise, Federal Reserve proj
Source: Washington Post
Economic Policy
U.S. unemployment rate will fall to 4.5 percent this year, inflation will rise, Federal Reserve projects
The Fed’s latest economic projections paint a much rosier picture compared to a few months ago.
By Rachel Siegel
March 17, 2021 at 4:26 p.m. EDT
Federal Reserve officials expect the economy to rapidly surge toward its pre-pandemic strength, with the unemployment rate falling to 4.5 percent by the end of this year, and inflation surpassing the Fed’s 2 percent target, according to projections released Wednesday.
The estimates paint a far-rosier picture than those released just a few months ago, before the passage of two economic stimulus bills and more widespread access to coronavirus vaccines.
Now, Fed officials anticipate that gross domestic product could grow 6.5 percent, the fastest since the 1980s. Inflation is also projected to hit 2.4 percent by the end of the year, a marked jump from the 1.8 percent projection in December. A growing number of Fed policymakers expect the economy to be healed enough to begin raising interest rates from near-zero in 2023.
It’s a significantly more optimistic outlook than just one year ago, when the Fed convened an emergency meeting and announced its biggest move since the 2008 financial crisis: slashing interest rates and buying up hundreds of billions of dollars in bonds. Shutdowns froze the U.S. economy, and millions of jobs vanished within weeks.
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Rachel Siegel
Rachel Siegel is an economics reporter covering the Federal Reserve. She previously covered breaking news for the Post's financial section and local politics for the Post's Metro desk. Before joining the Post in June 2017, Rachel contributed to The Marshall Project and The Dallas Morning News. Follow https://twitter.com/rachsieg
Read more: https://www.washingtonpost.com/us-policy/2021/03/17/powell-fed-inflation-stimulus/
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