News / Economy

Fed Upbeat Despite Dismal US Economic Report

VOA News
The U.S. economy barely grew during the first three months of the year, but the central bank is giving a bright outlook for the immediate future.

The Commerce Department says economic growth was a scant 0.1 percent during the first quarter. This was the slowest growth rate in more than a year, and a sharp drop from the last quarter of 2013.

Ending a two-day meeting Wednesday, the U.S. Federal Reserve blamed the slowdown, in part, on a harsh winter that kept people out of stores and slowed delivery of goods and services. But it said economic activity has since picked up, and households appear to be spending more.

The Fed also agreed to cut back on its purchases of bonds, a program it uses to stimulate a slow economy.

Its optimism encouraged investors Wednesday, sending the Dow Jones Industrial Average - the main U.S. stock index - to an all-time high.

But economist Adam Hersh at the Center for American Progress says in a VOA interview that he believes it will be a while before U.S. economic growth is strong enough to bring down still high unemployment and stimulate higher salaries.

Adam Hersh, economist, Center for American Progress:

"I expect that the economy is certainly going to strengthen from the rather disappointing growth number that we saw today for the first quarter," said Hersh. “But it’s going to be a long time before we get back to the strength of growth that is adequate to bring down the still-high unemployment that the economy is facing and to create pressure, upward pressure on incomes and wages for people out there who haven’t seen a raise in a very long time now.”

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