US economy still needs help from Federal Reserve

The US Federal Reserve on Wednesday slashed its forecast for the nation’s economic growth this year, just days after the International Monetary Fund (IMF) lowered its own forecast for the US economy.

The country’s central bank lowered its outlook for economic growth to between 2.1 percent and 2.3 percent in 2014, down from its previous prediction of nearly 3 percent, primarily the result of a disastrous winter in which the economy actually shrank by 1 percent.

Federal Reserve Chairwoman Janet Yellen said Wednesday at a news conference that the US economy still isn’t healthy enough to grow at a consistently strong pace without the central bank’s help.

Yellen also said she was particularly concerned that many long-term jobless Americans who had been unable to find work would be permanently excluded from the job market.

“It is conceivable that there is some permanent damage to them, to their own well-being, to their families’ well-being and to the economy’s potential,” she said, echoing a concern increasingly prevalent among economic policy makers.

Her remarks followed a statement from the Fed that it would further slow the pace of its long-term bond purchases. The bond purchases have been intended to keep long-term interest rates low. But the Fed offered no clear signal about when it will start raising its benchmark short-term rate.

US gross domestic product shrank at a 1.0 percent annual rate during the first quarter of 2014, the worst economic performance since the first quarter of 2011, the Commerce Department reported last month.

On Monday, the IMF lowered its own growth forecast for the US economy to 2 percent this year, down from an April estimate of 2.8 percent.