The U.S. Federal Reserve (Fed) sees “tentative evidence” the U.S. economy is emerging from recession and could show modest growth in the second half of the year, but policymakers lowered their growth forecast for all of 2009. The central bank revised its economic outlook Wednesday to show a decline in economic output to between 1.3 and 2.0 percent this year. The previous forecast released in February saw a contraction between 0.5 and 1.3 percent. The national unemployment rate may now reach almost 10 percent, up from 8.8 percent in the previous forecast. The notes from the Fed's last interest-rate meeting showed a slightly more optimistic tone from central bank policymakers, though they noted a range of ongoing economic and financial-market problems. “Participants agreed that the information received since the March meeting provided some tentative evidence that the pace of contraction in real economic activity was starting to diminish,” the notes from the April 28-29 meeting said. “Consumer purchases appeared to have stabilized after falling in the second half of 2008, and the steep decline in the housing sector seemed to be abating,” the notes said. “However, the contraction in the labor market persisted into March, industrial production again fell rapidly, and the broad-based decline in equipment and software investment continued.” The Fed said improvements in financial and credit markets were encouraging. “Private borrowing rates moved lower, stock prices rose substantially, and some measure of financial stress eased,” the notes said. Fed Chairman Ben Bernanke and his colleagues believe business sales and factory production will start to gradually recover later this year as President Barack Obama's stimulus package and the central bank's aggressive efforts to end the recession take effect.
