New forecasts issued by the US Federal Reserve indicate that the central bank believes the recession will ease, predicting a contraction of up to 1.5 percent this year, down from two percent predicted earlier this year. However, they are watching unemployment figures closely, forecasting the rate the go beyond 10 percent, compared with 9.6 percent in their former forecast. The unemployment rate hit 9.5 percent in June. Further out, the Fed predicted growth of up to 3.3 percent for 2010, and up to 4.6 percent in 2011. The Fed's report attributed the latest projections to economic stabilisation: "Consumer spending appeared to have stabilised since the start of the year, sales and starts of new homes were flattening out, and the recent declines in capital spending did not look as severe as those that had occurred around the turn of the year."