Fed: Jobless rate to be 9-10 percent through 2010

Federal Reserve officials expect unemployment in the range of 9 to 10 percent through 2010, according to minutes of its June meetings released Wednesday.

While the minutes highlight a slightly more positive near-term outlook for the economy, the officials are more gloomy on the labor market, and they anticipate more job losses for the economy.

Officials projected an average unemployment rate of 9.8 percent to 10.1 percent for the fourth quarter of 2009, about one-half a percentage point higher than the central projection of their April meeting.

The unemployment rate in June hit 9.5 percent.

Participants at the Fed meetings expected unemployment to decline in 2010 and 2011, but only modestly next year as voters go to the polls for midterm elections.

The unemployment rate has emboldened Republicans to argue the $787 billion stimulus backed by President Obama and Democrats has been a failure. Obama and his administration have forcefully defended the stimulus, arguing more jobs would have been lost without it, and that it will have a greater impact on the economy later this year.

Federal Reserve officials did agree that data indicates the economic contraction is slowing and that the decline in activity could cease. It noted that business and household confidence has picked up, and that strains in financial markets had eased.

Still, the officials also said credit remains tight, and that the global recession will make it difficult for U.S. exports to lift the U.S. economy. They also noted that improvements in market conditions were in part due to support from various government programs. Underlying economic conditions remain fragile, the report said.