CBO Director Doug Elmendorf (Phil McCarten/Reuters)
The latest Congressional Budget office report on the economy provides
little in the way of good news.
The national unemployment rate—now at 9.1 percent—isn't expected to drop below 8 percent until 2014, according to the report on the country's budget and economic outlook.
This year's budget deficit is estimated at $1.3 trillion—the third-largest in the last 65 years. And growth is projected to remain "well below the economy’s potential." The CBO predicts that real GDP will rise 2.3 percent this year and 2.7 percent next year.
TPM's Brian Beutler also reports, and notes "a major, major caveat."
"CBO initially completed its economic forecast in early July, but it updated the forecast in early August to reflect the policy changes enacted in the Budget Control Act [the debt limit deal]," the report reads. "However, the forecast described here does not reflect any other developments since early July, including the recent swings in financial markets, weakness in certain economic indicators, and the annual revision to the national income and product accounts. Incorporating that news would have led CBO to temper its near-term forecast for economic growth."
Emphasis added.
This is why the CBO's forecast for slow but steady recovery differs so markedly from private sector forecasts, which are increasingly leery of a double dip recession and project growth at levels much lower than previously expected.
Note also that the forecast also assumes that the Bush tax cuts will expire in 2012, so the report is only as optimistic as it is based on pre-debt ceiling deal debacle and the aftermath of it, and working on the probably flawed assumption that there'll be significant revenue increases after 2012.
You can read the full report here.