White House to issue jobless forecast--but disavows it

Reuters News
Posted: Feb 09, 2012 8:38 AM
White House to issue jobless forecast--but disavows it

By Caren Bohan

WASHINGTON (Reuters) - President Barack Obama will forecast an unemployment rate averaging 8.9 percent in 2012 in his annual budget on Monday - but before the document has been officially released his aides have already called the projection "stale."

Under pressure to reduce unemployment in an election year, Obama has welcomed a series of monthly reports showing unexpected declines in the unemployment rate.

The unemployment estimates that his administration will release next week underpin its forecasts on the path of budget deficits and the national debt. But the economic assumptions, including the jobless rate and gross domestic product, are usually calculated many weeks before the budget is actually unveiled.

In mid-November, when the economic forecasts were compiled, the nation's latest reported unemployment rate was 9 percent. Last month, the jobless rate dropped to a three-year low of 8.3 percent as employers added 243,000 new jobs. Because of that, Obama's aides said their previous forecasts are already out of date.

"We would certainly lower our forecast of the unemployment rate from the figures that will appear in Monday's Budget if we were to do another forecast today," top White House economist Alan Krueger said in an e-mail.

"The forecast of the unemployment rate that will accompany the Budget should be considered stale and out of date," wrote Krueger, chairman of the White House Council of Economic Advisors.

It appears the administration may leave people guessing about its more updated unemployment forecast. However, the budget document is set to make the case that if Obama's economic policies, including the extension of a payroll tax cut for workers, were adopted the country would see job strong growth.

(Reporting By Caren Bohan; additional reporting by Susan Heavey; Editing by Eric Beech)