What the U.S. economy needs - and what the Federal Reserve would surely like to see - is a gentle midcourse correction.

Over the three quarters that end at midyear, the output of goods and services in the United States probably will have grown at a 4% to 5% annual rate. This is well above our long-run growth potential, and has brought the economy quite close to the point where more upward pressure on prices and wages can be expected.

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