WASHINGTON (MarketWatch) -- The National Association for Business Economics sees the U.S. unemployment rate rising to 7.5% by the end of 2009, up from an October 2008 rate of 6.5%. The peak unemployment rate for the current downturn had previously been projected at 6.2%. The respondents in NABE's November survey also job losses are expected to persist through the third quarter of 2009, before the employment picture begins to improve. In addition, the survey showed that the median forecast among business economists is for the Federal Reserve to make no further interest-rate cuts, keeping the key benchmark rate at 1% until what NABE called a "modest rate hike" is implemented during the fourth quarter of 2009. U.S. housing demand may show signs of stabilizing, although both housing prices and housing starts will likely remain weak, the NABE respondents said. Moreover, they see the federal budget deficit hitting $576 billion during the government's 2009 fiscal year and, in light of the ecnomic weakness, are projecting that inflation will be well contained in the U.S. economy next year.
