Economic recovery in the US has one again strayed into a patch of turbulence, having reduced in speed rather significantly during the first six-months of 2012. Nevertheless, this didn’t seem to dampen spirits too much at the White House when this Friday’s economic forecasts surprised most of us with relatively optimistic content.
According to the report, the US economy is expected as a whole to grow a further 2.6% during the course of the year, which although not quite on par with the original 3% growth projection is still a frankly hard-to-swallow prediction when taking GDP data into account. Shortly before, the US Commerce Department revealed that the rate of economic growth had slowed significantly, from 2% in Q1 to 1.5% for the second quarter.
As such, in order for the economy to come out of 2012 with overall growth of 2.6%, every month from now until the end of the year needs to bring a growth rate of at least 3% or higher. And given the dwelling uncertainty regarding 2013 tax policies, lukewarm hiring across the nation and significant slowdowns in both China and Europe, chances of the President’s predictions holding true are slim to none.
By contrast, reports forecasting the situation on the job market for the rest of the year are rather more believable. With the unemployment rate currently holding at the 8.2% mark, the year’s overall prediction of 8% by the close of 2012 is very much within reach.
Speaking by way of an official White House blog post this week, Chairman of the Council of Economic Advisers Alan Krueger stated that while things are indeed moving in the right direction in favor of the economy, far stronger growth will be needed in order to repair the damage done throughout the recession.
In addition, economic growth for 2013 will according to the White House also reach 2.6%, but this all depends on whether Obama’s budget is passed by Congress and a fiscal cliff is ruled out of the equation.
And as it stands, every outcome remains plausible.