*********************************************************************************
CBO Paints Rosier Economic Picture for 2013
Budget estimators predict better growth, lower debt
February 5, 2013
Congressional Budget Office Director Douglas
Elmendorf gestures as he speaks during a news conference about the
office's annual Budget and Economic Outlook at the Ford House Office
Building on Feb. 5, 2013.
But as with the last CBO estimate of the nation's budgetary and economic outlook, estimates could shift depending on what Congress does with spending and the economy.
The report estimates that under current law the fiscal year 2013 deficit will come in at $845 billion, or around 5.3 percent of GDP. That's about half of where the deficit was in 2009. But CBO adds that debt as a share of economic output would remain at "historically high" levels—around $12.2 trillion, or 76 percent of GDP at the end of fiscal year 2013. That's the highest share of GDP that the national debt will have been since 1950, according to the CBO.
As for the broader economy, the office has sharply improved its outlook. In August 2012, the CBO predicted that the U.S. economy would shrink by 0.5 percent in 2013, with unemployment hitting 9.1 percent at the end of the year. Now, the office projects growth of 1.4 percent this year, with unemployment at 8.0 percent at the end of the year.
Though better than previous estimates, CBO's predictions still represent a bleak outlook. If the economy only grows by 1.4 percent in 2013, that's a slowdown from around 1.9 percent in 2012. And if unemployment remains above 7 percent through 2014, as the office projects, it will be 6th consecutive year with the jobless rate above 7 percent. That will make it the longest period of sustained high unemployment 70 years, the CBO says.
CBO's director Doug Elmendorf told reporters at a Tuesday press briefing that full economic recovery could be a long time in coming.
"We expect output to remain below its potential level until 2017, almost a decade after the recession started in 2007," he said.
Still, all of these estimates are contingent upon what Congress does in the coming months. The sharply positive revisions are due in large part to Congress veering away from the so-called "fiscal cliff"—stopping tax hikes for most Americans and putting off until March across-the-board budget cuts totalling $1.2 trillion over 10 years.
Often criticized by congressional Republicans who say the CBO too often skews its findings to support Obama administration policies, its latest report argues that all of the projections are conditional upon what Congress decides to do about sequestration.
If lawmakers allow across-the-board cuts to medicare, defense and other discretionary spending—or if they fail to enact a long-term debt ceiling agreement or maintain government funding—CBO would likely have to revise down its estimated economic outlook, officials say.
15 comments:
Reducing the deficit first time in 5 years under a trillion dollar is definitely an improvement. It actually shows that government is finally being serious about managing its finances. Nonetheless, it’s too little, too late. Government should have done that a long time ago. Population is aging in a scary pace. Baby boomers once an engine of the U.S economy are now seniors retiring putting more pressure on social programs, which are already running at its maximum capacity and are supported by government. This means not only help for millions of new retirees but also less revenue for the government. There is no easy way out of 12 trillion dollar debt as long as we are not going to do something about entitlements. Entitlements will keep adding up to the national debt each year with greater amounts. In terms of unemployment rate and economic growth, what if this is a new normal? What if the United States will not be able to make back to four of five percent GDP growth? I think after 2007-08 recession we are going to see new economy taking shape. This is higher unemployment rate as a new normal; more people employed in part time jobs and economic growth at 2%-3% a year and millions of people being unemployed for long periods of time.
the fact that the deficit is going to decrease under 1 trillion is great. it finnsly shows that the US is going in the right direction. But unemployment level is still to high. if the obama adminstration can get it below 7% it wo7ld be nice but i dont beleive thats going to happen anytime soon. Also the cuts that govt make will decrease the GDP which wont increase growth
Even with the deficit going below a trillion dollars, the share of economic output will remain "historically high". Also, the CBO's prediction of the economy growing 1.4 percent is .5 percent less than the growth last year. This leads me to believe that the economy isn't actually going in the right direction, but the numbers are being manipulated to make it appear as if it is. Finally, my biggest concern for the economy is the unemployment issue. Its time for a public work service project!
I certainly hope that Congress will attempt to make the right decisions in order to make the CBO's predictions become a reality. Though the predicted economic growth of 1.4 percent isn't exactly what we would hope for, as it states in the article, it is less than the growth rate of 1.9% last year, it's still better than a recession. Though it may take time, I think even small growth is better than none at all. Hopefully our government can find ways to eventually get the unemployment rate to a reasonable level. Overall the article is intended to give hope to those of us worried about the economic standing of our nation but I am troubled by Doug Elmendorf's statement that we shouldn't expect to see output reach its potential level until 2017.
It’s good to see that the deficit is finally decreasing. It shows that were doing something right with the government and the economy. Unemployment is still up which isn’t helping the economy any. If we can get the unemployment down I think it will help the economy even more so we can keep decreasing the deficit and hopefully faster. With the GDP decreasing because of the government cuts it wouldn’t surprise me to see the deficit increase again. If we can find a way to get GDP back up again it can’t hurt our deficit.
The fact that the deficit is decreasing is proving that the economy is on a slight uprise, but the real problem is still the high unemployment rate. With people out of work they have money to spend to stimulate the economy which is effecting the GDP negatively. Although is went from 9.1 percent to 8 percent this still is not good enough, but if there is a steady decrease in this number the cnomy could only get better.
The fact that the deficit is going to be below 1 trillion dollars is definitely an improvement to our nations economy. Some of the other numbers are a bit grim, like unemployment, but some improvement is better then no improvement at all, right? The "fiscal cliff" issue is one that has become a more popular topic of discussion and I do believe that our government is attempting to make effective changes that will eventually pull us out of this recession. It took time for us to dig this grave but i firmly believe that we are getting out of it.
As stated before, I do agree that the decrease in our nation's deficit is showing that we are slightly moving forward. However, while the unemployment rate is still pretty high, there's not much progression we can achieve. Obama's administration and congress should focus on working together to come to similar terms and make economic improvement visible to the citizens. Although the statistics make it seem like we are taken a step towards the right direction, I feel they are being used in such a way that makes our slight improvement seem exaggerated.
Let us hope that the CBO is correct with their calculations. Although they are stating we have projected growth, how much is enough to balance the problems we have already accumulated with debt? Some type of action must be done for the unemployment rate. The CBO states we can remain below our potential level for the next four years, giving us a recession of ten years. The only problem with employment would be how the new jobs effect the ones that are already in play. Will income decrease in order to balance the new members of the work force? Taxes rise? It seems the ball is now in congresses court and we can only hope for the best.
It is unbelievable of how the country will be able to have a deficit below $1 trillion in the past 5 years, in my opinion I think its a good start, but a little slow. But it is not final of course because the number could change because of expenditures during the year.
I think that we are still far from being done with the recession unemployment rates have doubled since 2007 when it was at 4%. Although the government I think had made a great effort in order to stop the number from increasing a greater effort needs to be made in order to get it back to where it needs to be.
I believe that in a nation as large as one as the United States of America with the dwindling economy, there is sure to be a deficit in the budget as there is a limited amount of money available while there are potentially an unlimited amount of wants to be satisfied and as such allocation must be utilized on the part of individuals and households, business and corporations alike as well as government. However, the current deficit of less than 1 trillion is a wonderful outlook for the economy of the United States but with an approximate forecast of the unemployment rate rising to 9.1% at the end of the year, begs the question: Are more people losing their jobs and choosing to remain in the labor force? Or are there more people entering the labor force?
Its good so see that the US is making strides to decrease the deficit. Even know the unemployment rate is still high, as it starts to decrease it will impact the economy in great lengths. While the GDP is decreasing due to government cuts, this makes it harder for the US to decrease the deficit anymore. In order to decrease the deficit for the greater of the economy we are going to need to find a way to get GDP back up.
I agree with most people saying that it is great that the deficit is slowly decreasing. It shows that economy is slowly getting back on the right path. Just like the saying goes slow and steady wins the race. We all know it will be a white until things go back to normal, but we have to keep trying. Unfortunately the unemployment rate is still very high and the economy needs to work on that as well. Obama's administration should concentrate on working together to come to similar terms to make an economic improvement to show everyone.
The economy is getting better; you can see this if you are looking around. Of course for people to become employed again is going to take the longest, it is just comforting that the governments efforts are not in vain. Hopefully these numbers by the CPO are correct, or at least in the ball park....
Although I believe unemployment is still extremely high it's actually pretty great news that the deficit is going to decrease. Even though the deficit will be under one trillion dollars it will still be extremely high. "Historically high" to be exact. But the fact that it is still decreasing regardless of the amount it has decreased by shows that things may be getting better.
Post a Comment