Fed policy makers expect 'subpar economic growth' in 08

With the credit markets still reeling from the mortgage and subprime housing crisis this summer, policy makers at the Federal Reserve are pessimistic about the overall strength of the economy, expecting only subpar economic growth in 2008.

According to a new and detailed report, forecasts of overall growth in 2008 now range from 1.6 to 2.6 percent, a sharp decline from this June, when estimates hovered around three percent.

Long-term trends are sketchier, but not very optimistic. The new report shows that almost all policy makers expect growth to be below trend until 2009, reports the New York Times.

While some analysts have warned of an imminent recession, other policy makers are more guarded with their prognostications. They are saying they do not think the economy will slip into a recession, writes the Times, but admit that they could be wrong.

Unemployment will rise to as much as five percent as well, but that is only a slight jump from the figure -- 4.7 percent -- the United States stands at today.

In the Washington Post-ABC News Consumer Comfort Index, pessimism about the economy has jumped to its highest peak in 17 years. "Sixty-eight percent of Americans say the economy is getting worse, a 13-percentage-point increase since October, and nearly 30 points above the long-term average for the question.

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