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22 July 2024

Obama budget projects lingering economic woes


The US economic recovery is likely to be lackluster with unemployment stuck at high levels until the end of the decade, according to projections in President Barack Obama's budget published Monday.

In the administration's ê3.8 trillion spending plan for the fiscal year beginning October 1, it predicted that unemployment will remain above six percent until 2017, although growth may pick up sooner.

"The administration is projecting a full recovery from the recession of 2008-2009, but one that is drawn out because of the lingering effects of the financial crisis," said the text.

While many past budget projections have proven speculative, they represent a decent snapshot of the direction the White House thinks the economy is traveling.

On this occasion the job projections may prove too pessimistic.

The unemployment forecasts were finalized in November, before a sharp down tick in the jobless rate.

"Were it possible to update the forecast for the budget, the unemployment rate in these projections would be lower," the text read.

The budget predicts unemployment will stay at 8.9 percent this year, fall to 8.6 percent in 2013 and 8.1 percent in 2014.

But in data recently reported for January, the rate had already fallen to 8.3 percent.

Meanwhile growth is expected to pick up from 2.7 percent this year to 3.0 percent in 2013 and 4.0 percent in 2014.

The budget also predicted that long-term inflation would remain subdued as weak demand kept prices around the Federal Reserve's informal target of two percent.