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No Sunshine for Obama in OMB's Economic Forecast

No Sunshine for Obama in OMB's Economic Forecast

By Alexis Simendinger - September 2, 2011


Nine is a lonely number.

The Obama administration anticipates voters could face a 9 percent unemployment rate when they go to the polls next year, according to a federal report Thursday that assessed where things stand with the budget and the economy.

Nine percent.

That would mean nearly one in every 10 Americans would be out of work 3 ½ years after the recession officially ended in June 2009. Today’s unemployment rate is 9.1 percent. How will Obama respond when the GOP revives Ronald Reagan’s classic 1980 campaign question: “Are you better off than you were four years ago?”

The latest budget and economic forecasts are bleak news for most Americans -- and heart-stopping for an incumbent president seeking re-election. And Friday morning's jobs report offered more bad news: The Labor Department says the unemployment rate remained unchanged in August as there was no net gain in workers. It also revised downward job gains previously reported for June and July.

A new poll released Sept. 1 found that 65 percent of adults -- two out of every three people -- now disapprove of President Obama’s handling of the economy. (The CNN telephone survey of 1,017 adults was conducted Aug. 24-25, and has a margin of error of plus or minus three percentage points.)

The new report also suggests that however diligently Obama toils with Republicans to balance the budget, that goal could elude his administration for eight years if he wins a second term. The administration’s current projections suggest he could conclude his presidency in 2017 with a unified budget deficit hovering close to $500 billion.

And there were additional worries tucked inside the Office of Management and Budget’s mid-year budget and economic assessment, known as the mid-session review.

The White House lowered growth estimates released just six months ago, knocking a full percentage point off February’s GDP projection for 2012 -- from 3.6 percent to 2.6 percent. The president’s budget office, which issues the mandatory report to Congress and the public, expects growth this year to average 1.7 percent.

“We are not forecasting a double dip recession,” economist Katharine Abraham, a member of the White House Council of Economic Advisers, told reporters. “We are still seeing sustained and steady growth.”

From 2012 through 2021, the White House said it expects federal receipts to drop by $882 billion compared with its snapshot projections in February -- a reflection of slower than anticipated growth. Ultimately, the White House forecasts that the economy will return to “a long-run growth path” averaging 2.5 percent. The administration said its outlook was “in line with other forecasts.”

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Alexis Simendinger covers the White House for RealClearPolitics. She can be reached at asimendinger@realclearpolitics.com. Follow her on Twitter @ASimendinger.

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