The Fed will be busy thes next few years

The Fed said recently that the unemployment rate this year will top 10%. To put that in perspective, the unemployment rate in March (8.5%) was the highest in 25 years. The Fed has pushed back their recovery forecast as well. The are now projecting our economy to flatten out in the second half of this year and began an upturn next year. The fed had projected the economy to experience and upward swing halfway through this year but it could be a drop in consumer credit that is playing a role. Consumers are afraid to spend money and lenders are scared to lend. Consumers need security in order to spend but they can't feel that security unless lenders are willing to lend them money. However, lenders are not willing to lend for fear that consumers will not spend. It is this lack of a balance that has caused this economic situation and caused the Fed to push back their forecast for the economy.