CBO: 1.4% GDP Growth, 7.5%-Plus Unemployment for 2013

February 5, 2013 - 1:25 PM

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(AP Photo)

(CNSNews.com) – The Congressional Budget Office (CBO) said in its most recent budget and economic forecast that the economy is expected to continue its sluggish pace of growth – just 1.4 percent – and unemployment is expected to remain above 7.5 percent again this year.

The CBO said that 2013 would set a record for the longest period of high unemployment since the Great Depression.

“CBO expects that economic activity will expand slowly this year, with real GDP growing by just 1.4 percent,” the Office said in its Budget and Economic Outlook report on Tuesday. “[T]he unemployment rate is expected to remain above 7½ percent through next year; if that happens, 2014 will be the sixth consecutive year with unemployment exceeding 7½ percent of the labor force—the longest such period in the past 70 years.”

The CBO said that planned budgetary changes already set in current law would impact the economy, causing it to grow slowly again this year.

“That slow growth reflects a combination of ongoing improvement in underlying economic factors and fiscal tightening that has already begun or is scheduled to occur—including the expiration of a 2 percentage-point cut in the Social Security payroll tax, an increase in tax rates on income above certain thresholds, and scheduled automatic reductions in federal spending,” the CBO said.

“That subdued economic growth will limit businesses’ need to hire additional workers, thereby causing the unemployment rate to stay near 8 percent this year,” the CBO said.