Reuters US ECONomy
Congressional Budget Ooffice's 2009 Outlook Worsens
Sees 1.5% GDP Drop
Washington, Mar 20 2009

The Congressional Budget Office (CBO) today offered a new, bleaker economic outlook for the US this year that sees a 1.5% drop in nominal GDP, worse than the 0.4% decline for 2009 it predicted in January. However, CBO also sees 3.8% growth in 2010 and 4.5% growth 2011, better than the 2.5% growth it predicted for 2010 earlier this year.

CBO did say in its latest economic and budget outlook that while the economy will likely deteriorate 'for some time,' efforts by the Fed and Treasury to stimulate the economy 'are projected to help end the recession in the fall of 2009.

But CBO's new estimate puts unemployment at 9.4% by the end of this year and early 2010, and says unemployment will remain above 7.0% through 2011. That's worse than CBO's January estimate for 2009 unemployment of 8.3%, and its 2010 estimate of 9.0%.

CBO mirrored the Obama Administration's budget deficit estimates for 2009 ($1.7 trllion) and 2010 ($1.1 trllion). But CBO said it thinks Obama's various plans to offer huge amounts of fiscal stimulus to the economy would add $2.3 trllion more to the budget deficit from 2010 to 2019 than the administration predicts. 'The differences arise largely because of differing projections of baseline revenues and outlays,' CBO said.

The administration is expecting the budget deficit to total $7.0 trllion from 2010 to 2019, but CBO is expecting a total deficit of $9.27 trllion.