The Federal Reserve recently released the minutes of the Federal Open Market Committee’s June meeting, and this is a rundown of its concerns and projections for the economy in the coming months. While revised projections of economic indicators were released in June, the rationale behind these revisions can be gleaned from the minutes of the meeting.
1. Economic growth will rebound in the second quarter
Based on the analysis of the FOMC, real growth in gross domestic product, the biggest measure of economic growth, is expected to bounce back in the second quarter as consumer spending improves, exports rise, and inventory investment picks up. The group lowered its assumed pace of potential economic growth for 2014 to a range of 2.1-2.3 percent from 2.8-3 percent in its March projections because of recent downward surprises in the unemployment rate and weaker-than-expected real GDP.
The economy contracted 2.9 percent in the first quarter, owing in part to a long, unproductive winter and sluggish demand. A faster pace of economic expansion may be supported by diminishing drag on spending from changes in fiscal policy, increases in consumer and business confidence, further improvements in credit availability, gains in household net worth, rising employment and wages, and a pickup in the rate of foreign economic growth, according to the minutes.