A slew of poor economic data points to a 'sluggish' economic recovery in the coming months, the Federal Reserve's top committee said in minutes published this evening.
Although members of the Federal Open Market Committee expected the recovery to pick up pace in 2011, minutes from the August 10 meeting showed all but one member backed a return to some crisis-era measures.
Faced with tepid news from the employment and housing sectors and evidence that the recession had been deeper than previously thought, members of the Fed's rate-setting panel warned the short-term outlook remained bleak.
'Real GDP growth was noticeably weaker in the second quarter of 2010 than most had anticipated, and monthly data suggested that the pace of recovery remained sluggish going into the third quarter,' the minutes said.
At a meeting in June, the Fed had already revised its growth estimates downward to between 3% and 3.5% for this year.
Against this backdrop the bank said 'all but one member' had agreed on the need to reinvest the proceeds from expiring mortgage backed securities in long-term US Treasury bonds, effectively sustaining crisis-era spending.
But members also sounded an optimistic note, stating that financial conditions 'became somewhat more supportive of economic growth.'
'While growth is expected 'to be more modest in the near term, participants continued to anticipate that growth would pick up in 2011,' the minutes said.
The Fed in June predicted the economy would grow by 3.5% to 4.2% next year.
