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News Wrap: Fed Forecasts Economic Growth Will Slow Over Next Year

November 2, 2011 at 12:00 AM EST
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HARI SREENIVASAN: Markets in Europe and the U.S. bounced back today. Investors moved in to snatch up stocks at bargain prices, after two days of heavy losses. The Dow Jones industrial average gained 178 points to close at 11,836. The Nasdaq rose 33 points to close near 2,640.

The Federal Reserve is now forecasting growth will be slower through next year and unemployment will be higher than earlier estimates. The Central Bank said today conditions have improved some since spring and it decided against new actions to boost the economy.

But Chairman Ben Bernanke said the situation must be closely watched.

BEN BERNANKE, Federal Reserve chairman: The pace of progress is likely to be frustratingly slow. Moreover, there are significant downside risks to the economic outlook. Most notably, concerns about European fiscal and banking issues have contributed to strains in global financial markets, which have likely had adverse effects on confidence and growth.

HARI SREENIVASAN: Bernanke also said he sympathized with the frustrations of Occupy Wall Street protesters. He conceded that he, too, is dissatisfied with the state of the economy and high unemployment.

Nearly one-quarter of the U.S. House has joined a call for $4 trillion in deficit savings — 40 Republicans and 60 Democrats sent a letter today to the deficit — deficit super committee. That panel is supposed to recommend at least $1.2 trillion in deficit reductions by Nov. 23. The 100 lawmakers urged the super committee to consider all options for raising revenue, but they gave no examples.

In Iraq today, seven people were killed in a series of bombings in the southern city of Basra. That news came as the government announced violent deaths in October were the highest this year — 161 civilians were killed last month, and 55 police officers lost their lives. Meanwhile, U.S. troops in Iraq started pulling out today. They are on schedule to be gone completely by the end of the year.

The prime minister of Israel defended his move to speed up building 2,000 apartments in Jewish sections of East Jerusalem. Benjamin Netanyahu said it was Israel’s right and duty. Other officials said it was an answer to the Palestinians gaining membership in the U.N. cultural agency UNESCO.

In Washington, White House spokesman Jay Carney said President Obama is deeply disappointed by the Israeli decision.

JAY CARNEY, White House press secretary: Unilateral actions work against efforts to resume direct negotiations, and they do not advance the goal of a reasonable and necessary agreement between the parties. And that’s the only way to achieve the two-state solution that both sides have as their goal.

HARI SREENIVASAN: The Palestinians have demanded a halt to all construction of Jewish settlements in disputed areas before they agree to resume peace talks.

The early calendar for the U.S. presidential race is now in place. New Hampshire today set the date for its first-in-the-nation primary, Jan. 10. That will be one week after the Iowa caucuses and 11 days before the South Carolina primary on Jan. 21. Then comes the Florida primary on Jan. 31 and the Nevada caucuses on Feb. 4.

The Republican nominating schedule had been in doubt as rival states moved up their dates, defying party rules.

Those are some of the day’s major stories.