Fed officials cautious on economic recovery

ATLANTA, Georgia (Reuters) – Federal Reserve officials on Tuesday struck a cautious note on the U.S. economy, citing high unemployment, heavy reliance on government support and commercial real estate woes as hurdles to recovery.

Speaking less than a week after the Fed left interest rates unchanged at near zero, San Francisco Fed President Janet Yellen and Atlanta Fed President Dennis Lockhart said the economy was still vulnerable.

"The strength and durability of the expansion is in question," Yellen said in Phoenix, Arizona.

"High unemployment, weak job growth and paltry wage increases are a recipe for sluggish consumer spending growth and a tepid recovery," said Yellen.

The Fed chopped overnight interest rates to near zero in December and it has pumped more than $1 trillion into the economy to spur a recovery from the deepest downturn since the Great Depression.

Last week, it reaffirmed its commitment to keep borrowing costs ultra-low for "an extended period," and financial markets will be listening to Fed officials closely to try to gauge when they may finally move to withdraw their economic support.

Whether the private sector can pick up the slack once the government boost is gone also remains to be seen, Yellen said.