The Economy According to the White House: Good, But Not Great

American Money

As prescribed by Section 1106 of the United States Code, the White House Office of Management and Budget submitted its Mid-Session Review to Congress this week. The MSR is an update on the administration’s estimates for government outlays and receipts, and right now is laser-focused on the deficit and ongoing economic recovery.

For some context, most observers don’t expect Congress to pass President Barack Obama’s budget this year. Republicans and Democrats are miles apart on both spending and taxes, and the 113th Congress is on track to be the least productive ever in the wake of the sequestration fiasco. Budget reform, while necessary, seems unlikely.

But the law is the law, the president is still the president, and the MSR is still a useful resource. The report contains an outlook of the U.S. economy painted by the current administration that is both cautious and optimistic, and champions many of the same priorities spelled out in the previous budget proposal that Americans can expect the White House to continue pursuing.

“We have seen positive economic growth for 15 consecutive quarters,” the report says. “Through June, the private sector has added jobs every month for 40 straight months, with a total of 7.2 million jobs added over that period.  This year alone, more than 1.2 million private sector jobs have been added so far. The unemployment rate has fallen from a high of 10 percent in 2009 to 7.6 percent as of June. Manufacturers have added more than 500,000 jobs over the past three years. And the housing market and the auto industry continue to show signs of recovery.”

The upbeat commentary on the labor market is supported by a series of indicators that all point in the same direction. Payrolls are growing at an average rate of more than 180,000 per month, second-quarter job cuts are down about 18 percent, and initial claims for unemployment insurance have trended lower. The mantra championed by the White House and the U.S. Federal Reserve is that things may not be great, but they’re getting better.

Jobs

As with most recent economic commentary, the good news has some qualifiers. The report continues: “But while the economy is adding jobs, too many Americans are still unemployed and have been looking for work for too long. Businesses are hiring again, but too many are still struggling to compete and find workers with the right skills to meet their needs.”

UnemploymentGov

Deficit

Besides jobs, the deficit is the most important issue tackled by the MSR. On this front, the White House has good news to report: “The 2013 deficit is now projected to be $759 billion, $214 billion lower than the $973 billion deficit projected in the budget. As a percentage of gross domestic product, the 2013 deficit is now projected to equal 4.7 percent, down from the 6.0 percent projected in the budget.”

DeficitGDP

GDP

The White House projects that real GDP will increase 2.4 percent in 2013, 3.4 percent in 2014, and average 3.5 percent between 2015 and 2017 — a collective growth rate that is slightly lower than what was estimated in the 2014 budget.

RealGDP

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