Difficult economic times ahead, CBO warns

[The Northerner]

WASHINGTON — The U.S. economy faces even more difficult times ahead with chronic high unemployment rates and slow manufacturing growth hurting the recovery, Congressional Budget Office Director Douglas Elmendorf said on Thursday.

The U.S. unemployment rate will not fall to around 5.0 percent until 2014, Elmendorf wrote in his blog about CBO's new economic and budget outlook.

Without significant changes in U.S. tax and spending laws, the U.S. government will struggle to dig its way out of a fiscal deficit hole, the CBO said, and this may influence the outcome of the November 2 midterm congressional elections.

Anxiety over the economy could punish President Barack Obama's Democrats at the polls given perceptions of big budget deficits resulting from government spending and high unemployment.

CBO, the non-partisan budget analyst for Congress, forecast the U.S. budget deficit will hit $1.342 trillion this year, down slightly from its March projection of $1.368 trillion.

CBO attributed most of the $27 billion change in its fiscal 2010 deficit projection to an estimated $50 billion reduction in the cost of TARP, the U.S. government's bailout of financial institutions in 2009.

Read more: http://www.msnbc.msn.com/id/38770982/ns/business-stocks_and_economy/

[jtuck004]

1. 5% unemployment in 2014 - who is he trying to kid? How about 8% till 2020.

It is extremely possible that we won't be under 8% 'till as far out as 2020. In the following link know that I HATE this guy's politics, so when he gets into opinion it's obvious that he doesn't understand what it will take to fix it - but the underlying data, before you get to his interpretation, primariy from the BLS, covering the great job creation under Clinton through Bush's destruction of our economy, make it pretty clear that we are in a lot more trouble than anyone seems prepared to accept.

And if the people running the country refuse to recognize the problem, they won't fix it, and tens of millions of people will have already worked the last job they ever will. And we will be the poorer for it. Maybe losing more than we know...

Data here...

This includes a downloadable spreadsheet into which you can plug your own numbers. I went back and averaged the data from the BLS as far back as 1950, averaged Clinton's work, several others.

The estimate that we won't be under 8% until 2020 is certainly possible, maybe even likely. One can like it or dislike it, but I haven't found anyone that can reasonably refute it yet.

[Lost4words]

2. +1 nt

[dixiegrrrrl]

3. Before you take this guy's numbers too seriously

be aware of his history.
He has been working closely with Greenspan, Larry Summers, the Federal Reserve, etc for many years.
I would prefer numbers from a more independent, less agenda driven source.

[jtuck004]

5. I understand and agree, and that's why I put the disclaimer in there.

But only his opinions are his. The BLS numbers are the BLS numbers, not his, as well the number of jobs created during the Clinton adminsitration, the math of numbers of jobs per month isn't his, and neither are the stats.

But they are publicly available, and although their math is not entirely public, I have not found a consistently better source that everyone could agree on.

So I pulled these off the the BLS database precisely because I didn't want to accept that his numbers were accurate. They are not that far off, and the numbers I got from the BLS include periodic revisions made by the BLS as other data comes in, after his was posted. I just used the AVERAGE function in excel to get a monthly average across years:

"Monthly Growth in Total Nonfarm Employment, Seasonally Adjusted: 1980-2008
Average Per Month Thousands.


Year
----
1980 22
1981 -4
1982 -177
1983 288
1984 323
1985 208
1986 158
1987 263
1988 270
1989 162
1990 26
1991 -71
1992 96
1993 233
1994 321
1995 179
1996 233
1997 280
1998 250
1999 264
2000 163
2001 -147
2002 -45
2003 7
2004 173
2005 211
2006 175
2007 91
2008 -256
2009 -373

The best years were, of course,Clinton, partly based on his tax increases and partly based on the government-funded research in ARPA which became the Internet, and the resultant dot com boom.

Bush came in, did the tax cuts, got some anemic growth, then the jobs just fell off the charts (so much for the tax cuts=jobs theory).

We need about 125,000 jobs a month just to stay even. If we want to employ the 15 million people who are unemployed (U3), we would have to create jobs above that. Let's say 200,000 above the break-even - that would still take us till mid 2016 - and that doesn't take care of the ones who have left the market (always happens in a recession and they don't come back until we are out), and it doesn't take care of those who are working but can't make enough to pay their bills (U6).

So let's be overly optimistic - let's say we can create 325,000 jobs a month, a number even the best job creator of the modern era never reached - how many people who are unemployed today will be able to wait until 2016 to have even a chance at a job?

I would love to see anything at all that will create enough demand to add 325,000 jobs a month, every month, starting this month, for the next 6 1/4 years.

I may not like his politics or opinions, but the data is not that far off. 2020 is, for a lot of people.

**************************

That said, I might not trust me either - here is the path to the data:
I have read those figures in so many places, and looked it up once to prove it to myself, don't remember where. So I just use 100,000 as the most conservative figure I have found. It is probably higher, just based on how many people are aging upwards, but 100K is good enough for this.

To get the employment data start at: http://www.bls.gov/webapps/legacy/cesbtab1.htm

For Total Nonfarm - Select box for Seasonally Adjusted
at bottom of table select "Retrieve"
on next page select More Formatting Options

Deselect Original Data Value

Select 1 month net change

On right side change From year to 1980 (or whatever)

Select "Retrieve Data" at bottom.

That's total nonfarm employment as it goes up and
down each month.

Select the .xls printed next to Download, save it,
and pull it up in Excel. Average each of the lines.

In general, Clinton was '93 through 2000, W was 2001 through 2008.

[Kurt_and_Hunter]

4. optimistic

Unemployment 5.0 percent until 2014?

I don't know of any force in play that will automatically get us to 5.0 organically in any time frame.

This has to be an historical view making no predictions about how things have changed during the last decade and during this downturn