Fed sees less severe recession this year on vaccine hopes

Federal Reserve officials on Wednesday said they expect the U.S. economy to shrink by 2.4 percent this year, a brighter forecast than they offered just two months ago, when they said output could drop much as 3.7 percent.

Still, the hit to the GDP roughly equals that of 2009 — the worst year of the Great Recession.

Central bank officials also bumped up their projected growth rates for 2021 and 2022, in the wake of encouraging news about a coronavirus vaccine as well as renewed hopes for another round of economic relief. They also offered a rosier outlook for unemployment, expecting the rate to drop to 5 percent next year, down from an estimate of 5.5 percent in September.

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