The U.S. economy is growing faster than Federal Reserve officials expected, indicating that the recovery in the last months of Donald Trump’s presidency was much stronger than commonly thought.
At the conclusion of the two-day meeting of the Federal Open Market Committee, the Fed released a summary of the economic projections of Federal Reserve board members and Fed presidents. These showed some large, positive changes since the last release of projections in September.
The median projection for the path of the economy in 2020 is a 2.4 percent contraction, less severe than the 3.7 percent contraction forecast in September. At the June meeting, the median projection was for a much larger 6.5 percent contraction.
The median projection for the unemployment rate at year’s end came down to 6.7 percent from 7.6 percent in September and 9.3 percent in June.
The revisions indicate that Trump administration’s efforts to speed up the recovery, helped along with the economic aid package it shephered through Congress this spring, have been more effective than most analysts expected.
The Fed also upgraded its views for next year and the year after that. The economy is expected to expand 4.2 percent in 2021, up from the 4.0 percent expansion forecast in September. The 2022 growth rate is projected at 3.2 percent, up from 3.0 percent.
Unemployment is now seen as falling to 5.0 percent in 2021, compared with 5.5 back in June. It is projected to fall to 4.2 percent by the end of 2022, down from 4.6 percent projected in June.
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