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Fed expects higher economic growth than previously estimated

by Adam Russett on February 17, 2011

A recent meeting at the Federal Reserve ended with lawmakers estimating that there would be a higher rise in economic growth in 2011 than they had originally expected, according to CNN.com.

Last November, the organization that the gross domestic product (GDP) this year would see a 3.0 to 3.6 percent rate of growth, but now a 3.4 to 3.9 percent rate is expected.

Production and spending are driving factors in this new equation, which indicates that the recovery from the Great Recession may be faster and stronger than previously thought.

Officials also lowered their unemployment rate estimates – from 9 percent to 8.8 percent minimum – but that doesn't represent as significant a change as the growing GDP. Still, they noted that if spending remains strong, the economy will stay on course and jobs will hopefully follow.

However, there are still lingering problems that may change these numbers. The European debt crisis has caused apprehension among many investors and companies alike, while there are budget issues existing for states and local governing bodies.

The New York Times reports that, if the GDP is growing at the fastest predicted rate, then it marks the most rapid growth since 2004. Experts expect that this will only slightly impact results for unemployment rates by 2012 and agree that the best case scenario would be for the jobless rate to sink below 8 percent by election season.

Factory output has risen due to truck and car sales and new home construction is the highest it has been in the past 20 months.

"Things are moving in the right direction, and the Fed is taking that into consideration," Martha A. Starr, an economics professor at American University, told the news provider. "But even with the better growth prognosis, it will take a while for the average person on the street to feel it."

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