Dreary Outlook: Fed Cuts Economic Growth Forecast

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Global stocks fell Thursday after the Federal Reserve brought down its estimates for U.S. economic growth.

Federal Reserve Chairman Ben Bernanke had announced on Wednesday that the U.S. economy is growing slower than previously predicted.
The central bank now expects the economy to grow between 2.7 percent and 2.9 percent - down from its previous estimate of 3.1 percent to 3.3 percent.

"Some of the headwinds that have been concerning us -- like problems in the housing sector -- some of these headwinds may be stronger and more persistent that we thought," Bernanke said.
Those headwinds stalling the economy include housing, high gas prices, and high food prices.
Bernanke's announcement came just as the Congressional Budget Office issued a dire warning.  The CBO says the nation's debt is on pace to equal the annual size of the economy within a decade, warning there could be "sudden fiscal crisis" if it is left unchecked.

Meanwhile, a bipartisan committee led by Vice President Joe Biden's will try again Thursday to reach a deal that will raise the government's credit limit while shaving trillions of dollars from the budget.

"We're dealing with very difficult issues," House Budget Committee ranking member Chris Van Hollen, D-Md., said following Wednesday's meeting.

"I think the good news is that we're still around the table," he added.

But as Republicans push spending cuts, Democrats want to focus on jobs for the 14 million Americans who are currently unemployed.

"We need trillions of dollars of savings and spending cuts and to demonstrate to the American people that we are changing the system here and that the spending is not going to get out of control again," House Majority Leader Eric Cantor, R-Va., said. "And that is the test for us as we go forward in these discussions."
"I think the mission of Congress if you listen to the American people should be very direct and that's creating jobs for Americans," Sen. Dick Durvin, D-Ill., said.  "Unfortunately, our Republican colleagues in the House and Senate are driven by putting one man out of work -- President Obama."

House Speaker John Boehner, R-Ohio, disagreed with the notion that spending was the path to job creation.

"Democrats think that spending money that we don't have is the only way to create jobs.  Well, guess what?  We tried that.  It was called the stimulus.  And guess what, it didn't work," he said.

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Efrem Graham

Efrem Graham

News Anchor & Reporter

Efrem Graham is an award-winning journalist, who comes to CBN News from the ABC owned and operated station in Toledo, Ohio.  He received his master's degree from the Columbia University Journalism School. He also holds a bachelor's degree in English Literature from the Richard Stockton College of New Jersey.  Follow Efrem on Twitter @EfremGraham and "like" him at Facebook.com/EfremGrahamCBN.