Fed Expects 7.8 to 8 Percent Unemployment at Year's End

(Image credit: Susan Walsh/AP)

The Federal Reserve now expects a slightly lower unemployment rate at the end of the year than it did in its previous prediction.

In its updated outlook released on Wednesday, the Fed is estimating that unemployment, now at a three-year low of 8.2 percent, will be between 7.8 and 8 percent at the end of the year - rather than 8.2 to 8.5 percent stated its previous projection.

In his interview with Diane Sawyer, Ben Bernanke said that he expects unemployment to be at about 8 percent at the end of the year.

January 2009 is the last time the unemployment rate was 7.8 percent, when the U.S. economy was buoyed by several federal stimulus efforts.


The Fed predicts the economy will grow between 2.4 and 2.9 percent in 2012, this also a slightly higher growth rate than the previous forecast.


The Fed still expects inflation to be about 2 percent in coming years.


Weakness in housing and troubles in Europe are two factors the Fed Board and Chairman Bernanke pointed to as threats to the U.S. economy.  That said, the Fed did not indicate any plans for a new stimulus and said that it will keep interest rates low until 2014.


So far no major reaction from the U.S. markets.  All three major indices are up for the day,  NASDAQ is on a bit of a tear, thanks to Apple.