Economy limping back to strength; 'Slow-motion recovery' Fed: Return to normal may take 5 or 6 years
The unemployment rate will remain elevated for years to come, according to a forecast released Tuesday by the Federal Reserve that addresses for the first time economic conditions at the time of the next presidential election.</br></br>It paints a grim picture. Top Fed officials expect the unemployment rate to remain in the 6.8 to 7.5 percent range at the end of 2012 and said it could take "about five or six years" from now for economic activity to return to normal. The jobless rate was 10.2 percent in October.</br></br>That sober forecast came on top of a revised government estimate also released Tuesday of economic output in the third quarter showing that the recovery got off to a slower start over the summer than previously thought.</br></br>Government efforts to prop up the economy -- including the $787 billion stimulus package passed in February, the "Cash for Clunkers" program to support auto sales this summer, and a zero interest rate policy by the Federal Reserve -- are helping. The contribution of government spending to gross domestic product in the third quarter was actually higher than originally reported, the Commerce Department said.</br></br>"It is a slow-motion recovery," said Stuart Hoffman, chief economist at PNC Financial Services Group. "It sure doesn't look like the beginning of a normal, rapid recovery."