(12-11) 13:05 PST WASHINGTON (AP) --

Federal Reserve policy-makers expressed concerns at their October meeting
that the battered job market might not fully recover until at least 2005
even if the economic recovery grew stronger, according to minutes released
Thursday of the discussion.

That concern was one reason why Fed Chairman Alan Greenspan and his
colleagues on the group that sets U.S. interest rate policy held a main
short-term rate at a 45-year low of 1 percent and suggested rates might stay
in that range for a "considerable period."

"Members generally anticipated that an economic performance in line with
their expectations would not entirely eliminate currently large margins of
unemployed labor and other resources until perhaps the latter part of 2005
or even later," according to minutes of the Federal Open Market Committee's
Oct. 28 meeting.

Private economists have said the job market probably would be the last part
of the economy to spring back from the 2001 recession. Still, there have
been encouraging signs recently of a turnaround.

The Fed acknowledged that in October, saying the labor market appeared to be
stabilizing. That contrasted with a weakening market they described at their
September meeting.

"However, the extent to which recently positive labor market developments
might be harbingers of substantial further employment gains was unclear at
this point, given evidently continuing business efforts to respond to
growing demand by improving productivity rather than hiring new workers,"
the Fed said in the October minutes.

The Fed's next meeting, the final of the year, was Tuesday. Policy-makers
kept short-term rates steady, renewed their promise to maintain them at low
levels for some time and offered their most upbeat assessment of the economy
in recent months. The economy is "expanding briskly and the labor market
appears to be improving modestly," they said.

The unemployment rate dropped to 5.9 percent in November, the government
reported last week. Although the economy added jobs for the fourth month in
a row, the increase of 57,000 positions was much weaker than the 150,000
that private economists were forecasting.

A recent survey by the National Association for Business Economics predicted
the economy would grow a respectable 3 percent this year and speed up to 4.5
percent in 2004.

Fed members in October also discussed ways to improve communications with
Wall Street and Main Street, agreeing to consider specific proposals at a
later meeting, according to the minutes.