U.S. unemployment to top 9 percent, recession to deepen

By Pedro Nicolaci da Costa

NEW YORK (Reuters) - U.S. unemployment will top 9 percent before the recession is over, according to a Reuters poll of economists that points to a significantly bleaker economic outlook than just one month ago.

The current quarter is likely to mark the low point for output, marking a 4.9 percent annualized contraction, the worst since 1982 and far deeper than the 3.5 percent shrinkage forecast in a similar poll just one month ago.

U.S. gross domestic product (GDP) shrank an annualized 3.8 percent in the fourth quarter of 2008, the deepest trough since 1982 although not as bad as the euro area or Japan.

But analysts say an eventual rebound in U.S. growth will be at best meek since the crisis has done lasting damage to the nation's productive potential.

U.S. GDP will shrink 1 percent in 2009 as a whole, according to the poll of nearly 60 economists taken Feb 13-19, contracting sharply in the first six months but then slowly gaining some traction toward year-end.

"Even that may be way too optimistic," said Joseph LaVorgna, chief U.S. economist at Deutsche Bank.

Unemployment is forecast to rise sharply, eventually putting more than 13 million Americans out of work. Already at 7.2 percent, the highest since 1992, the jobless rate is set to soar to 9.1 percent, a level not seen since 1983, before it stabilizes.

The figures were collected before the Fed published the latest downgrade to its own forecasts, effectively giving up hope for economic growth in 2009.