Unemployment: The Government’s Scary Projections

unemployed

Calculated Risk has pulled out the GDP and unemployment assumptions from the budget proposal the Obama administration submitted today. They are:

For GDP, they are forecasting real GDP growth of 2.7% in 2010, followed by 3.8%, 4.3% and 4.2% in 2013.

For unemployment, the forecast is for an average of 10% in 2010, with a decline to 9.2% in 2011, 8.2% in 2012 and 7.3% in 2013.

Hmm, how do they get to those GDP numbers with that sort of unemployment? A couple of other thoughts:

  • Are they sandbagging the numbers so they can look better? Remember they were too optimistic going in last year.
  • What do they think happens to U-6? If it follows the same trends then we’re talking about millions of working Americans consigned to marginal existence for the foreseeable future.
  • How many politicians are going to take a look at those numbers and start looking elsewhere for employment? I just don’t see the electorate docilely buying off on unemployment at that level.
  • Are they going to redefine full employment higher than the conventional 5.5%?

There’s a world of peril in these numbers.

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