The Congressional Budget Office has more bad news for President Barack Obama: His economic recovery isn’t working — and is much worse than the previous four recoveries.
“More than four and a half years after the end of the recession, employment has risen sluggishly — much more slowly than it grew, on average, during the four previous recoveries that lasted more than one year,” the report reads. (CBO: Obama’s proposed minimum wage hike would cost 500,000 jobs by 2016)
The CBO also lent credence to Republican insistence that the small declines in unemployment often touted by the White House are largely because of disenchanted and unemployed people dropping out of the labor force and not being counted. (RELATED: CBO triples estimate of Obamacare work force cuts to 2.3 million)
“At the same time, the unemployment rate has fallen only partway back to its prerecession level … and a significant part of that improvement is attributable to a decline in labor force participation that has occurred as an unusually large number of people have stopped looking for work,” the CBO report reads. “Moreover, the rate of long-term unemployment — the percentage of the labor force that has been out of work for more than 26 consecutive weeks — remains extraordinarily high.” (VIDEO: Sebelius slashes Obamcare enrollment expectations, blames CBO)
The CBO report counts the recession as beginning “in December 2007, when the economy began to contract,” and ending “in June 2009, when the economy began to expand again.”
Though the CBO was more optimistic about the next decade, the report cautions to not expect the labor market to recover for years.
“CBO expects that, under current laws governing federal taxes and spending, output will grow more rapidly in the next few years than it has in the recent past but recovery in the labor market will continue for some time,” the report reads. “The agency projects that by the second half of 2017, the gap between actual and potential GDP will return to its average historical relationship — bringing the effects of cyclical conditions on unemployment and labor force participation back to their average values in 2018.” (RELATED: White House rushes to attack CBO report on minimum wage increase)
“The pace and nature of the economic recovery have been difficult to predict, and the path of the economy and the labor market will no doubt hold surprises as well,” the summary concludes. “CBO’s projections of the labor market are subject to several sources of uncertainty, and many developments could cause outcomes substantially different from those CBO has projected.” (VIDEO: Bob Beckel: CBO ‘lost its mind’ with report on minimum wage hike)
The report was compiled by CBO’s Macroeconomic Analysis Division analysts David Brauer and Charles Whalen.