The White House today predicted that unemployment would likely stay above 9 percent through the 2012 election as President Obama campaigns for a second term, and will not drop below 6 percent until 2016.
“In sum, economic growth and job creation, while positive, have not been strong enough to bring down the unemployment rate to an acceptable level,” according to the Mid-Session Review released today by the Office of Management and Budget.
The administration cut its deficit forecast for 2011 to $1.3 trillion, 20 percent lower than the $1.6 trillion deficit projected in February. Long-term deficit reduction is also projected to be lower than previously expected, with a total reduction of $1.45 trillion over the next 10 years. This reduction reflects primarily the impact of the Budget Control Act, which lawmakers signed to avoid a default earlier this summer.
As a percentage of GDP, the deficit is projected to equal 8.8 percent, down from 10.9 percent predicted in February.
While the economy grew by 0.7 percent in the first half of this year, the White House insisted today that the economy was not headed toward a double dip recession. “We are still seeing sustained and steady growth, so we are not forecasting a double dip recession,” Council of Economic Advisers Member Katharine Abraham told reporters on a conference call today.
As the president readies to deliver his jobs proposal next week, Office of Management and Budget Director Jack Lew said that the Mid-Session Review “underscores that we need to get back on a sustainable fiscal path, and we also need to invest in long-term economic growth and job creation.”