The Federal Reserve sketched a bleaker outlook Wednesday for the U.S. economy, which it thinks will grow much more slowly and face higher unemployment than it had estimated in June.

The central bank now predicts the economy will grow no more than 1.7 percent for 2011. For 2012, it foresees growth of about 2.7 percent. The Fed sees unemployment averaging between 8.6 percent by the end of next year. The rate is now 9.1 percent.

Those growth rates are far too low to drive down unemployment. Even so, the Fed said after its two-day policy meeting that the economy had improved since nearly stalling in the spring. As a result, it��s putting off any new actions so it can gauge the impact of steps it��s already taken. The Fed said consumers have stepped up spending.

Still, it said the economy continues to face significant risks, including the debt crisis and risk of recession in Europe. The Fed left open the possibility of taking further steps later to try to boost the sluggish economy.