The White House Office of Management and Budget released its mid-session review (MSR) of the economy and the federal budget today — blaming volatility for a slower recovery.
Using data from June OMB predicted 3.3% GDP growth in 2012 and unemployment at 8.3 per cent, but an “alternative” forecast that uses the latest data projects real GDP growth of 2.6% and the unemployment rate hovering at 9%.
The projections far outpace those of Wall Street. Goldman Sachs is expecting just 2.1% GDP growth and 9.25% unemployment in 2012, while JP Morgan sees just 1.3% GDP growth and 9.5% unemployment.
Council of Economic Advisers Member Katharine Abraham said the alternative forecast, which includes the latest economic data, was included to reflect how the economic outlook has changed in the last month due to increased volatility in the markets.
Since Obama presented his budget in February, OMB says the debt ceiling bill and other legislation have saved $1.45 trillion from being added to the federal debt next year. But even with the additional $1.5 trillion to be cut by the “super committee” later this year, deficits over the next decade will rack up $5.76 trillion in debt — or $6.78 trillion if the Bush tax cuts on high income wage-earners are continued.
Office of Management and Budget Director Jacob Lew said, “The MSR largely confirms what we already knew — and what CBO already released — it underscores that we need to get back on a sustainable path, and that we need to invest in long-term economic growth and job creation.”