Fed Says Unemployment Could Top 10%

A pessimistic forecast for labor recovery highlighted the projections. Individual fed officials anticipated unemployment to range between 9.7% and 10.5% in 2009, which was adjusted up from the prior range of 9.1% to 10%. One official even forecast unemployment to come to 10.6% in 2010.

The so-called "central tendency" forecast, which throws out the highest and lowest projections, ranged from 9.8% to 10.1%. April's central tendency unemployment range came between 9.2% and 9.6%.

In June, unemployment climbed to 9.5%.

Despite that, the group believed that the economy would shrink less than its prior outlook. Individual officials said GDP would contract between 1.6% and 0.6%, down from the 2.5% and 0.5% shrinkage forecast before. Central tendency figures showed GDP shrinking between 1.5% and 1%, which is also better than prior forecasts.

In 2010, the group anticipates the economy to grow between 2.1% and 3.3%, according to central tendency estimates.