Recent data have been somewhat better than expected, helping ease concerns that the economy may be stalling. We expect that real GDP will grow moderately through the end of next year. Such slow growth is unlikely to push down the unemployment rate this year, and we anticipate only modest declines next year. There are some serious downside risks to this outlook. The economic outlook has worsened worldwide of late, and in particular in developed economies. In particular, the sovereign debt crisis in Europe poses a significant risk to economic growth, both globally and in the United States. Given our forecast of moderate real GDP growth and persistently high levels of unemployment, we see little reason to expect higher inflation. Instead, inflation is projected to decline a bit from recent levels and stay at or slightly below the level that most Federal Open Market Committee participants appear comfortable with.