U.S. economy: Feeling better yet?

A bit of good news today for the world's largest economy.

The Fed upped its estimates of U.S. gross domestic product growth for this year. The U.S. economy is now expected to grow in a range of 3.4 percent to 3.9 percent in 2011. That's up from a range of 3 to 3.6 percent.

Why? Stronger consumer spending, which makes up about two-thirds of all economic activity in the U.S.

Though in the great economist tradition of the "on one hand, on the other" lingusitic framework ridiculed by President Harry Truman, the Fed also hedged its bets:

“On the one hand, the additional spending could reflect pent-up demand following the downturn, or greater confidence on the part of households about the future, in which case it might be expected to continue,” the latest Fed minutes noted. “On the other hand, the additional spending could prove short-lived, given that a good portion of it appeared to have occurred in relatively volatile categories such as autos.”

The Fed also saw fewer deflationary risks, the nightmarish scenario that has played out in Japan for much of the past two decades.

On the other hand (ahem), this year's economic growth probably won't be strong enough to help the U.S. economy's biggest problem: persistantly high unemployment.