White House report predicts lukewarm job growth in 2010

A new White House forecast projects that the economy will add jobs at a sluggish pace this year, which will not help improve unemployment, according to The Washington Post.

The economic agenda in the annual Economic Report of the President includes overhauling health care, restructuring financial regulation and dealing with long-term budget deficits. However, the forecast data shows that the economy could be functioning well below its potential for years.

The U.S. is expected to add an average 95,000 jobs this year, which is slightly below the number economists believe is necessary to keep up with population growth. The unemployment rate is expected to fall slowly, averaging 8.2 percent in 2012 when President Obama will be up for re-election.

The economy has had some good news recently with a sharp decline in the number of new jobless claims during the first week of February and the unemployment rate dropping to 9.7 percent in January from 10 percent in December 2009. The report forecasts an average unemployment rate of 10 percent in 2010.

Still, though many economists believe the recession ended during summer 2009, only 12 percent of Americans agree. And only 45 percent of Americans believe the economy has begun to recover.

Obama's advisers say they intentionally were conservative when developing the forecast and believe legislation being considered in Congress could generate jobs and improve the situation.

"There is a lot of uncertainty as we still don't know what form any further targeted initiatives on jobs might take," says Christina Romer, chairman of the White House Council of Economic Advisers. "I think something along the lines of a new jobs tax credit could have tremendous upside potential and really ignite private-sector hiring."

The report also details the administration's proposal to stabilize the budget deficit at about 3 percent of the gross domestic product (GDP), arguing that the level of deficits would allow the U.S.' debt-to-GDP ratio to remain stable at about 70 percent. Although the debt load would be high by U.S. standards, it is not unheard of in other large industrial countries.

"A debt-to-GDP ratio of about two-thirds is comfortably within the range of historical and international experience," the report states. "It represents substantial fiscal discipline relative to the trajectory the administration inherited."

Date : 2/12/2010