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Fed: Expect Higher Unemployment

Officials at the Federal Reserve think that unemployment could hit 10 percent later this year. The forecast comes out of the the Fed's June 24th meeting. Minutes from that meeting were just released today. From the minutes:

The large number of people working part time for economic reasons and the prevalence of permanent job reductions rather than temporary layoffs suggested that labor market conditions were even more difficult than indicated by the unemployment rate.

Members of the Federal Reserve predict an unemployment rate of 9.8 to 10.1 percent for 2009. In April, those same officials predicted a 9.2 to 9.6 unemployment rate for the year. According the Bureau of Labor Statistics, the unemployment currently stands at 9.5 percent.

On a more positive note, the Fed did predict that unemployment is likely to decline next year. They also raised their prediction for GDP growth, saying the U.S. economy would grow up to 3.3 percent in 2010, and 4.6 percent in 2011.