The Economic Report of the President has been released and, as always, is a fascinating read.
Below is the crux of the administration's economic forecast:
As usual, I'm most concerned on the jobs front, and it seems as though even the Obama team is resigned to a brutally slow jobs recovery.
Below is a chart showing nonfarm payroll employment from 12 months prior to the start of a recession to 84 months (7 years) from the month it starts. Jobs are indexed to 100 for the recession start month. I've broken out our previous two "jobless recoveries" from 1990 (green) and 2001 (let's call it burgundy). The purple line (on top) is the average of 8 other recessions (prior to 1990 and 2001 and excluding those two), so we're looking at 10 other recessions in all. Red is the current recession. The dashed olive line is a forecast based on the average NFP growth rate of the 8 recessions (purple line). You'll note that the dashed olive line roughly parallels the purple line, as it should given the growth rates are virtually identical.
(Click through for gigundo chart)
Source: St. Louis Fed, Economic Report of the President
Based on my calculations, the Obama team (neon blue dash-dot line) is forecasting a slower-than-average jobs recovery that won't get us back to Square One (e.g. the level of December 2007) for 65 months hence, or some time in mid-2013. The 2001 recovery had jobs back to their previous high in what was then an unthinkable 46 months, a record we will handily beat this time out. (For the record, I think any forecasting beyond about 24 months becomes highly speculative, but that said, I see no reason to believe this jobs recovery will be either average or above-average.)
In any event, given what we know about almost all administrations' forecasts -- that they're too optimistic -- I find this forecast unacceptable. More must be done to put Americans to work and get us back to Square One sooner rather than later.
