Fed forecasts rough economic times in near term

The Federal Reserve said after leaving interest rates unchanged Tuesday that the U.S. economy has taken a turn for the worse.

Strains in financial markets have increased significantly and labor markets have weakened further, the Fed Board of Governors said in a statement issued after its meeting on the interbank federal funds rate. Economic growth appears to have slowed recently, partly reflecting a softening of household spending. Tight credit conditions, the ongoing housing contraction, and some slowing in export growth are likely to weigh on economic growth over the next few quarters.

U.S. GDP improved in the second quarter to 3.3 percent, but unemployment in August reached its highest level in years at 6.1 percent, inflation is above 5 percent and industrial out is also down.

On the bright side, oil prices have fallen below $95 a barrel from a high of $147 a barrel several weeks ago, helping consumer prices dip 0.1 percent in August, the government reported. 

Source: American Shipper