Data presented to Federal Reserve policymakers last month indicated that the US economy would shrink this year, with a 'moderate recovery' in 2010.
Minutes from the Fed meeting on December 15-16, at which the Federal Open Market Committee (FOMC) cut US rates to near zero, were released tonight.
They showed a report from Fed staff which included a grim economic forecast. It showed economic activity 'appeared likely to decline substantially in the fourth quarter of 2008'.
The data showed an economy suffering on many fronts, with weak employment conditions, declining consumer and business spending, declining stock market wealth and tight credit. The housing market, where the economic crisis began, 'was expected to contract further', the report stated.
US economic activity contracted at a 0.5% annual pace in the third quarter, according to the latest official data available. But many economists see a sharp contraction of up to 6% in the fourth quarter and ongoing weakness in 2009.
