Federal Reserve officials expect the unemployment rate to remain above 9 percent until the end of 2020, with the economy shrinking by more than 6 percent in that time, according to projections released Wednesday.
The 17 members of the Federal Open Market Committee (FOMC), which sets Fed interest rates, projected a median unemployment rate of 9.3 percent in 2020, falling to 6.5 percent in 2021 and 5.5 percent in 2022.
The unemployment rate was near a 50-year low of 3.5 percent in February before it spiked to 14.7 percent in April amid closures imposed to slow the spread of the coronavirus pandemic. It fell to 13.3 percent in May.
The FOMC also projected the U.S. economy to shrink by a median of 6.5 percent of gross domestic product (GDP) in 2020, recovering to a growth rate of 5 percent by 2021 and 3.5 percent by 2022.
Federal Reserve Chairman Jerome Powell warned Wednesday that "the unusually high level of uncertainty about the outlook" complicated the FOMC members' projections.
"Nonetheless we believe that regular publication of the [Summary of Economic Projections] provides a useful perspective on the way FOMC participants are assessing the path ahead," he said.
The Fed's projections come after a surprisingly strong May jobs report boosted hopes of a quicker recovery from the coronavirus-driven recession. The U.S. added 2.5 million jobs in May, largely due to the return of 2.7 million workers from furlough, defying expectations from economists of another month with millions of jobs lost.
"The May employment report, of course it was a welcome surprise," Powell said Wednesday. "We hope we get many more like it, but I think we have to be honest. It's a long road."
--Updated at 2:49 p.m.