• Facebook
  • Twitter
  • Subscribe
  • RSS

White House Budget Office Projects 9% Unemployment Rate Through 2012

There’s another projection out for long-term unemployment, and there’s nothing good about it:

President Obama’s mid-session budget review confirms what most private and government projections have recently concluded — that the economy is considerably weaker than earlier forecasts held, and won’t fully recover from the Great Recession for years.

Most troubling, both for the country and for Obama politically, is that near-term unemployment is expected to remain significantly higher than expected, averaging 9 percent in fiscal year 2012.

Obama’s budget office initially calculated its economic forecast based upon data available through June. Even that data presaged an 8.8 percent average unemployment rate in 2011 and an 8.3 percent average rate next year. But the mid-session review got delayed, and when the Office of Management and Budget revised it to incorporate the data through the end of August, the picture became much gloomier. Unemployment will average 9.1 percent this year, and 9.0 percent next year, OMB concluded, and won’t dip below 7 percent until 2015 at the earliest.

The revised figures “reflect the substantial amount of economic turbulence over the past two months,” OMB says, triggered by the European debt crisis, the earthquake in Japan, congressional brinkmanship over the debt ceiling among others. They also take into account the fact that GDP growth in the first half of fiscal year 2011 turned out to be significantly lower than originally thought.

Usually, the White House is where the rosy optimistic forecasts come from, but these numbers are pretty much consistent with forecasts we’ve seen from other sources, and there’s no reason to believe that they are all that off base considering the current economic conditions and the seeming unlikelihood of a robust economic recovery any time soon. The White House forecast says that they don’t foresee a double-dip recession, but we’re skirting so close to the edge of one right now that it wouldn’t take much to push us over the edge, and the act that does it is more likely to come from the ongoing crisis in Europe than anything happening in the United States.

All of this leaves us with the question of how, exactly, Barack Obama is going to manage to find a way to win re-election in November 2012 if the unemployment rate is, say, 9.0% and job growth remains anemic. I’ll throw that one to comment thread.

 

Related Posts:

About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May, 2010 and also writes at Below The Beltway. Follow Doug on Twitter | Facebook

Comments

  1. legion says:

    Well, you can’t really expect any movement from Big Biz with more carrots (lower tax rates, etc.), as that hasn’t worked for the last 3 years. The next thing to try would be the stick: take away financial incentives for corporations to sit on large piles of liquidity and/or invest in paper assets over productive assets. But that’s just crazy talk.

    Like or Dislike: Thumb up 1 Thumb down 0

  2. Boyd says:

    @legion:

    [T]ake away financial incentives for corporations to sit on large piles of liquidity and/or invest in paper assets over productive assets.

    Is that happening to any significant extent? I really don’t know one way or the other, or even have an idea of how to find out.

    Like or Dislike: Thumb up 0 Thumb down 0

  3. Ben Wolf says:

    @Boyd: The administration is doing exactly what neo-classical/neo-liberal economic models suggest it do regarding unemployment: nothing. D.C. policy thinking is dominated by microeconomic philosophy which literally denies involuntary unemloyment can exist. If someone isn’t working it’s because they choose not to work. The result is our fiscal and monetary policies are and have been completely ineffective in dealing with mass unemployment.

    Like or Dislike: Thumb up 1 Thumb down 1

  4. Boyd says:

    @Ben Wolf: I’m not sure what your remarks have to do with my question to legion, but…well, okay.

    I think a whole buncha people would disagree with your claim that the Obama administration is doing nothing about unemployment. Key among that number would be the Obama administration, as well as their political opponents.

    BTW, I agree with (what I think is) your opinion that the government should do precisely nothing about unemployment. I think a case could be made for some level of government to provide job training, but due to the likelihood of the training being ineffective, as well as the potential for government corruption, I would default to government staying out of it.

    Like or Dislike: Thumb up 1 Thumb down 0

  5. Ben Wolf says:

    @Boyd: I accidentally hit the reply button in my last post, I think.

    Like or Dislike: Thumb up 0 Thumb down 1

  6. Mickey says:

    @legion:

    What carrots are you referring to. All this administration has given business in America are threats, regulations, mandates, and more taxes. If they want Businesses to grow in America:

    Lower the Capital Gains rate
    Let companies bring their money back from overseas without giving 35% away.
    repeal Obamacare
    Get rid of all these pro-union rules. Refer to Boeing and the transportation bill if you need to.

    If he does these things, business will grow and we will not have to watch our country be myred in 9% unemployment for the next 3 to 5 years.

    Like or Dislike: Thumb up 0 Thumb down 1

  7. FDR created 15 million jobs with the WPA, CCC, and other programs. FDR also created the WPA by executive order, so Obama could do the same thing tomorrow if he wanted to. So he doesn’t want to.

    Permanently high DISemployment benefits corporations in two ways. First, people without jobs are desperate to get them (so they don’t lose their homes, their health care, or worse). That keeps wages low. Second, those who have jobs are desperate to keep them. That permits a speed-up and keeps productivity high. As a result, corporate profits are higher than ever — although they’re invested offshore.

    These policies are obviously quite business friendly. I understand why people like Mickey have to whine, but with corporate profits at an all time high, whining is all it is.

    Like or Dislike: Thumb up 0 Thumb down 0

  8. Ben Wolf says:

    @Mickey:
    Lower the Capital Gains rate
    This does not impact employment

    Let companies bring their money back from overseas without giving 35% away.
    This will not impact emloyment. Businesses don’t hire because profits are up, they hire when hiring helps generate more profits. You have the causation completely backwards

    repeal Obamacare
    This has not impacted employment, and there is absolutely no empirical evidence it will in the future

    Get rid of all these pro-union rules. Refer to Boeing and the transportation bill if you need to.
    The country was far more “pro-union” in the 1959’s, 60’s and 70’s when we had virtually non-existent unemployment. There is no empirical evidence unions increase unemployment.

    We have high unemployment because consumers are so heavily leveraged they must save rather than spend. Nothing you’ve suggested will change that.

    Like or Dislike: Thumb up 0 Thumb down 1