The U.S. Economy Will Soon See Its Best Years in a Decade, Forecasters Say
By Josh Zumbrun
The White House, Congressional Budget Office and Federal Reserve unanimously see the nation on the cusp of the best years for the economy in a decade or more.
In its latest round of economic forecasts, released Monday with the president’s budget, the White House sees the unemployment rate falling below 5% by the end of 2016, the lowest since before the recession. The White House sees growth of 3% this year and in 2016–the best back-to-back years since 2004 and 2005.
“The U.S. economy has substantial room for growth, although there are factors that could continue to limit that growth in the year ahead,” the White House report said. On the positive side, the report noted declining unemployment, support from Federal Reserve policy, and pent-up demand as consumers regain confidence after nearly seven years of economic doldrums. On the negative side, the report sees lingering effects of the credit crisis and continued weakness in European and Asian economies.
The White House’s economic projections have, at times, been too optimistic. In President Barack Obama’s first budget, for example, the White House projected much lower unemployment than private economic forecasters and the CBO. Forecasters and the CBO thought unemployment would still climb; the White House saw it declining. With hindsight, the administration was also much more optimistic than what actually followed, when unemployment climbed to 10%.
Yet in recent years, the White House forecasts have sometimes erred on the side of too much pessimism, particularly for the unemployment rate. Last year, the White House projected unemployment would average 6.9% in 2014. Instead unemployment averaged 6.2%, and ended the year at 5.6%.
Now the White House, CBO and Fed all see growth strengthening in coming years, and all see unemployment declining.
Their optimism in part reflects the economy’s steady momentum in recent years. Despite international turmoil, fierce budget battles and lingering scars from the financial crisis, the unemployment rate has steadily declined for more than five years. Economic growth has been both disappointingly slow but persistent.
The White House sees growth of 3% over 2015 from the fourth quarter of 2014 to the end of 2015. That compares with 2.9% for the CBO and forecasts between 2.6% to 3% for most Fed policy makers. By 2017, the White House sees 4.9% unemployment–better than the CBO’s forecast of 5.3%–but in line with Fed forecasts of between 4.9% and 5.3%.
One factor behind the White House’s upbeat outlook is the easing of the fiscal battles that defined so much of Mr. Obama’s first term. The budget deficit in 2014 was the smallest of Mr. Obama’s presidency and the White House now projects that budget cutting will not be an economic drag in the years ahead.
The White House’s economic forecast assumes that the president’s budget is enacted in full; an assumption that generally doesn’t work out. The policies hoped for in the budget this year include higher taxes on capital gains, comprehensive immigration reform, and an expansive package of infrastructure investment.
In its latest round of economic forecasts, released Monday with the president’s budget, the White House sees the unemployment rate falling below 5% by the end of 2016, the lowest since before the recession. The White House sees growth of 3% this year and in 2016–the best back-to-back years since 2004 and 2005.
“The U.S. economy has substantial room for growth, although there are factors that could continue to limit that growth in the year ahead,” the White House report said. On the positive side, the report noted declining unemployment, support from Federal Reserve policy, and pent-up demand as consumers regain confidence after nearly seven years of economic doldrums. On the negative side, the report sees lingering effects of the credit crisis and continued weakness in European and Asian economies.
The White House’s economic projections have, at times, been too optimistic. In President Barack Obama’s first budget, for example, the White House projected much lower unemployment than private economic forecasters and the CBO. Forecasters and the CBO thought unemployment would still climb; the White House saw it declining. With hindsight, the administration was also much more optimistic than what actually followed, when unemployment climbed to 10%.
Yet in recent years, the White House forecasts have sometimes erred on the side of too much pessimism, particularly for the unemployment rate. Last year, the White House projected unemployment would average 6.9% in 2014. Instead unemployment averaged 6.2%, and ended the year at 5.6%.
Now the White House, CBO and Fed all see growth strengthening in coming years, and all see unemployment declining.
Their optimism in part reflects the economy’s steady momentum in recent years. Despite international turmoil, fierce budget battles and lingering scars from the financial crisis, the unemployment rate has steadily declined for more than five years. Economic growth has been both disappointingly slow but persistent.
The White House sees growth of 3% over 2015 from the fourth quarter of 2014 to the end of 2015. That compares with 2.9% for the CBO and forecasts between 2.6% to 3% for most Fed policy makers. By 2017, the White House sees 4.9% unemployment–better than the CBO’s forecast of 5.3%–but in line with Fed forecasts of between 4.9% and 5.3%.
One factor behind the White House’s upbeat outlook is the easing of the fiscal battles that defined so much of Mr. Obama’s first term. The budget deficit in 2014 was the smallest of Mr. Obama’s presidency and the White House now projects that budget cutting will not be an economic drag in the years ahead.
The White House’s economic forecast assumes that the president’s budget is enacted in full; an assumption that generally doesn’t work out. The policies hoped for in the budget this year include higher taxes on capital gains, comprehensive immigration reform, and an expansive package of infrastructure investment.
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