Both the Federal Reserve and the International Monetary Fund warned of
prolonged high unemployment levels in the US. While the Fed didn't
provide any details, the IMF projected that unemployment levels in
developed countries such as the US will remain high for the next two
years. Currently the unemployment rate is just under 10% and the IMF
estimates tha the level will remain around 8% through 2011. This
assessment has cooled the positive economic data that is coming
through this week. Retail sales were up 1.6% last month, which was
better than expected. However, high levels of unemployment will cap
long-term growth in consumer spending. This means the recovery will
likely proceed at a slower, longer rate.
Finally, information on industrial production is expected to show some
positive gains today.
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