Tags: US | Economic | Outlook

Congress Budget Agency Lowers US Economic Outlook

Tuesday, 13 Sep 2011 01:38 PM

 

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The U.S. economic outlook is gloomy and any drastic action could make things worse, according to testimony Tuesday before a congressional 'super committee" trying to cut the federal deficit.

The Congressional Budget Office — the non-partisan budget and economic analyst for Congress — said U.S. economic growth would slow from previous estimates and a nagging, 9.1 percent jobless rate would basically remain stuck there through next year's presidential and congressional elections.

"The economic outlook remains highly uncertain," CBO Director Douglas Elmendorf told an inaugural hearing of the congressional panel charged with finding at least $1.2 trillion in new government savings over the next decade.

Elmendorf said his agency now sees economic growth of around 1.5 percent this year and 2.5 percent in 2012. That's down from CBO's August estimate of 2.3 percent and 2.7 percent, respectively.

New data since CBO pieced together its August outlook contributed to the downward estimates, Elmendorf said.

The U.S. unemployment rate, now at 9.1 percent, will remain "close to 9 percent through the end of 2012," Elmendorf said. Last month, CBO estimated joblessness at 8.9 percent this year, falling to 8.5 percent in 2012.

The super committee has until Nov. 23 to come up with the savings mandated by a deficit-reduction law enacted in early August.

As it begins its search for either further spending reductions or new tax increases, which are drawing opposition from either Democrats or Republicans, Elmendorf warned the super committee to tread carefully.

"Particularly important given the current state of the economy, immediate spending cuts or tax increases would represent an added drag on the weak economic expansion," Elmendorf told the panel.

© 2014 Thomson/Reuters. All rights reserved.

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