The Federal Reserve Board and the Federal Open Market Committee (FOMC) have released economic projections for the next few years, showing that the gross domestic product (GDP) could contract by 6.5 percent this year, but predicting recovery in the next several years.
GDP is projected to rise to 5 percent by 2021 and settle around 3.5 percent in 2022, before going even lower to around 1.8 percent after that in the long term.
For unemployment, which hit a high of over 14 percent in April, the worst since the Great Depression, predictions show the numbers will start to go down, albeit slowly.
In 2021, predictions show the median unemployment rate will be 6.5 percent, with a high of 12 percent, as the economy continues to recover from the pandemic. And in 2022, the high is predicted to be around 8 percent with a 5.5 percent median. The long-term unemployment rate is predicted to be between 3 percent and 5 percent.
Looking at personal consumption expenditures (PCE) and inflation, the FOMC's median numbers predict that inflation could spike 1.6 percent in 2021 and 1.7 percent in 2022.
While many Americans are feeling more optimistic about the economy now as opposed to the past few months, inflation is a main concern for many people due to the various disruptions from the virus, recent studies have found.
The Federal Reserve said it would not raise interest rates for the time being in an attempt to help the economy recover from the pandemic, instead keeping them near zero through 2022, Chairman Jerome Powell said at a press conference.
“We’re not thinking about raising rates,” Powell said, according to Yahoo Finance. “We’re not even thinking about thinking about raising rates."
The majority of the 17 members seemed to be fine with keeping the rates at the current low levels, according to the Yahoo report. Only two of them made cases for raising rates by the end of 2022, with one making a case for four rate hikes in 2022.