Recent economic news has been disappointing, confirming that the economy has been growing much less quickly than was expected earlier in the year. The easing of some of the economic headwinds should allow growth to pick up in coming quarters, though evidence suggests that some of the recent weakness is persistent. Meanwhile, conditions continue to fare moderately worse in the Twelfth Federal Reserve District than in the nation as a whole, with unemployment rates in many District states remaining well above the national unemployment rate. Our forecast projects a gradual reduction in unemployment and a return to a low level of underlying inflation once the transitory increases associated with the run-up in food and energy prices are played out.
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