WASHINGTON - The erratic path of the three-year-old US economic recovery will weigh on Federal Reserve policymakers when they gather next week, amid a fresh bout of anxiety over the slow pace of revival.
The Fed’s interest rate-setting panel will meet Tuesday and Wednesday in Washington to decide whether more stimulus for the spluttering economy is warranted.
While Fed Chairman Ben Bernanke has sounded more positive about the state of the economy in recent weeks, high gasoline prices, slowing job growth and Europe’s debt problems have raised fears of another spring stumble.
For consecutive years, the US recovery has come unstuck heading into summer thanks to Middle East revolutions, European debt crises and Japanese earthquakes. With that burned into the collective conscience, US economists, policymakers and Wall Street have recently shown the kind of self-doubt normally reserved for spotty teenagers.
There has been “a recurring and almost maddening ‘stop-go’ pattern to this recovery—stronger pulses followed by lulls,” said Joshua Feinman, chief global economist for DB Advisors. “There does seem to be an underlying improvement in the US economy, albeit a modest and erratic one, very much of the ‘two steps forward, one step back’ variety.”
The latest significant setback came with March unemployment figures, which showed the unemployment rate dropping to 8.2 percent, but the economy creating a meager 120,000 jobs. That puts the Fed in a difficult spot.