By Alexis Simendinger
- July 12, 2014
Each summer, the Office of Management and Budget produces a new snapshot of the economy and the nation's fiscal condition. The green-eyeshade report, known as the mid-session review, normally attracts scant attention, in part because so many other entities have summer snapshots depicting similar terrain.
Other picture-takers can include the Congressional Budget Office, the Federal Reserve, the Treasury Department, private-sector economists, and federal agencies that gather essential data about employment, wages, inflation and the economy's expansion (or contraction, in the case of this year's first quarter).
In its re-appraisal of fiscal 2015-2024 released Friday, the Obama administration celebrated the expectation of rapidly shrinking federal deficits, lower unemployment, and projections for growth (growth that surmounts what the White House said are House Republicans' 'manufactured crises').
The administration produced some other rosy scenarios, chief among them the assumption that the president's budget becomes law as submitted to Congress. (That view of the budget world, in which a president's policies are warmly accepted on Capitol Hill, is typically the summer work of fiction in any White House.)
Here are a few other takeaways from the report, which updated an economic forecast last completed in November with newer information current as of early June:
Immigration reform, which President Obama conceded this month is dead on Capitol Hill, is part of his mid-session assessment, tallied to lower deficits by $158 billion from 2016 through 2024. In reality, some reform advocates question whether reform could clear Congress during the remainder of Obama's presidency. (Obama's policy wish list, including similarly blocked ideas, is nonetheless reprised in the White House summer budget assessment.)
The nation's 2014 deficit, measured at 3.4 percent of gross domestic product, is smaller than the administration had projected in March (OMB forecast 3.7 percent). The deficit in 2015 is projected to drop further to 3 percent of GDP. That's a figure that cheers many economists and deficit hawks, who consider it a gateway to 'fiscal sustainability' when considering the nation's accumulated debt.
Growth, which the Bureau of Economic Analysis said contracted by 2.9 percent in the first quarter of the year, remains on a positive trajectory, according to OMB. Cold winter weather and slower inventory restocking, dubbed 'idiosyncratic,' accounted for a 'temporary disruption in growth,' OMB said. If Congress adopted Obama's fiscal policies, 'the administration projects economic growth to rebound in the second quarter and remain above trend ... through 2017,' the budget office said.
Nonetheless, the budget office conceded that slower-than-anticipated growth sliced $12 billion off receipts in 2014, and $760 billion over the 10-year budget window.
On Friday, a survey of U.S. business economists revealed a less optimistic assessment of the impact of the dismal first quarter along with expectations for modest consumer spending. Economists said they think the economy grew by 3 percent in the second quarter, down from expectations of 3.5 percent. For the entire year, those surveyed by the National Association of Business Economists predict growth to dip to 1.6 percent, less than the 2.5 percent they anticipated in their June survey.
OMB forecasts 2.6 percent growth for this year, according to its summer update, but the White House conceded its optimism is hinged to a long-shot wager: 'For 2014, the administration's 2.6 percent projected rate of real GDP growth during the four quarters of the year is higher than those of the other forecasters, in part because of the assumption that Congress will enact the policies proposed in the president's 2015 budget before the end of the year.'
As for unemployment, the administration believes the jobless number will drop to 6.0 percent by the fourth quarter of 2014, and to 5.4 percent by 2017, in part because 'discouraged workers are expected to rejoin the labor force.'
Obama has been celebrating strides in job creation during economic speeches this month, but tells audiences he recognizes wage increases have been negligible for many Americans, an inhibitor for increased consumer spending.
'As a whole, the country is doing better,' Obama said Thursday during remarks in Austin, Texas. 'But the problem is that so much of the improved productivity and profits have gone to the folks at the very top, and the average person, their wages and incomes haven't really gone up at all, and in some cases, haven't kept up with the rising cost of health care or college or all the basic necessities that people need.'
If Congress embraced his policies, the president said, middle-class Americans would realize a healthier economy, more jobs and higher wages.
'What drives me nuts -- and I know drives you nuts -- is Washington isn't doing it,' he added.
Entities 0 Name: Obama Count: 7 1 Name: Congress Count: 5 2 Name: OMB Count: 4 3 Name: Capitol Hill Count: 2 4 Name: Treasury Department Count: 1 5 Name: Alexis Simendinger Count: 1 6 Name: Federal Reserve Count: 1 7 Name: U.S. Count: 1 8 Name: Washington Count: 1 9 Name: Congressional Budget Office Count: 1 10 Name: National Association of Business Economists Count: 1 11 Name: Bureau of Economic Analysis Count: 1 12 Name: White House Count: 1 13 Name: Austin Count: 1 14 Name: Texas Count: 1 15 Name: Office of Management and Budget Count: 1 Related 0 Url: http://ift.tt/1rg2tn4 Title: White House: 2014 deficit to drop $100B : Stltoday Description: WASHINGTON (AP) - The government's budget deficit will drop to $583 billion this year, the lowest level of President Barack Obama's tenure, the White House said Friday. Last year's deficit was $680 billion. The latest update from the White House budget office is also $66 billion less than the administration predicted earlier this year when releasing the president's budget.
