–FOMC/CBO Forecasts ‘Out Of Date” Given Encouraging Jan Payrolls
–Economic Recovery At ‘Moderate Pace”, Will Continue and Gather Speed
–Labor Market ‘Gradually Improving’, Remains Admin’s Top Priority

By Chris Cermak

WASHINGTON (MNI) – The White House Friday said it expected job
growth of 2 million this year, above the 1.8 million jobs created last
year, as part of its annual economic report to Congress.

The White House’s Council of Economic Advisors, which crafted the
report, did not update other forecasts included in the White House’s
FY’2013 Budget Report released earlier this week. But the report does
note that unemployment forecasts by the Federal Reserve and
Congressional Budget Office are “somewhat out of date in view of the
encouraging January labor market report.”

Alan Krueger, chairman of the Council of Economic Advisors, in a
conference call said the FY’2013 budget’s forecast of an 8.9%
unemployment rate this year was also “out of date”, but would not be
revised until the mid-session review. The estmate of 2 million jobs for
this year, however, was updated to reflect the January payrolls data, he
said.

The 2 million jobs forecast translates to 167,000 payroll gains per
month in 2012. The White House forecasts payroll gains will increase
to 220,000 per month in 2013.

The report notes the economy is expanding at a “moderate pace” and
says the recovery “will continue and gather speed” in the coming years.
The White House sees little threat from inflation, arguing that ongoing
labor slack means “the economy has considerable room to expand without
increasing price pressures.”

But the White House report also warns global growth “may falter in
the near term for reasons related to the sovereign debt crisis in
Europe,” which could have an effect on U.S. exports that have
contributed to the recovery.

Krueger said he expected U.S. consumer spending to expand on a par
with income growth in 2012, while the report says housing should have a
“positive impact” on growth in 2012, as it begins expanding from a “low
base” after years of contraction.

With companies hoarding cash, business investment was also poised
“to grow rapidly if demand accelerates,” the White House said.

Absent any external shocks, the report says exports were poised to
continue their recent growth trend, with the administration on track to
reach its 2010 goal of doubling nominal exports by 2015.

“Much work remains to restore the U.S. economy to full health,” the
White House report said. “Only a prolonged and robust expansion can
eliminate the jobs deficit, and the economy as a whole has considerable
room to grow.”

The White House report also cites policies and progress made since
the recession, and touches on many of the themes and policies
highlighted by President Obama in recent weeks and months, including
reducing income inequality, improving education and infrastructure.

–Chris Cermak is a Washington reporter for Need to Know News

** Market News International Washington Bureau: 202-371-2121 **

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