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Fed Boosts Economic Outlook: Productivity Surge
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The Federal Reserve has revised its economic outlook, predicting a growth rate of 2.3% in 2026, up from 1.8% previously, and 1.7% in 2025, a slight increase from 1.6%. Inflation is expected to decrease, with the PCE index projected to be 2.9% in 2025 and 2.4% in 2026. Unemployment is forecasted to peak at 4.5% this year and 4.4% next year. The improved outlook is attributed to a surprising increase in productivity, with Chairman Jerome Powell citing business automation and AI as potential contributors. This productivity surge, along with strong consumer spending and business investment, has led to a bullish market reaction, with major indexes seeing significant gains.
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