The Federal Reserve has upped its expectations for the end-of-year forecast, now predicting that the real gross domestic product (GDP) will fall by only 2.4 percent, CNBC reported.
Citing the central bank’s Summary of Economic Projections released Wednesday (Dec. 16), the bank upped its positivity. In September, the bank expected there to be a 3.7 percent fall.
In addition, the Fed raised the projection for the 2021 real GDP forecast to 4.2 percent from the 4 percent previously expected.
The Fed said the unemployment rate will likely hit around 6.7 percent overall as the year ends, which is an improvement over the 7.6 percent that was last forecasted. By 2021, the unemployment rate is estimated to fall to around 5 percent. The last estimate for 2021 was also higher at 5.5 percent, marking another improvement.
In a statement on Wednesday, the Federal Open Market Committee (FOMC) said it would still be buying around $120 billion in bonds per month “until substantial further progress has been made toward the Committee’s maximum employment and price stability goals,” according to CNBC. Inflation estimates have so far remained unchanged. They still sit at 1.2 percent, with the FOMC predicting that the personal consumption expenditures (PCE) inflation rate will rise to 1.8 percent next year, an increase of its previous 1.7 percent increase.
Recovery predictions have been common throughout the pandemic, with the grim forecasts early in the year due to the mass layoffs eventually giving way to more optimism as vaccine news turned positive. Recently, the government has begun to distribute vaccines, which so far are going to the most vulnerable and in-need.
Wells Fargo CEO Charles Scharf, for example, predicted that the economy will recover easily once most of the population can be vaccinated, PYMNTS reported. Scharf said the world is “far, far better” in terms of the economy than it seemed three to six months ago.
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