The director of the nonpartisan Congressional Budget Office had little but bad news on the economy for Congress.
The pace of the U.S. economic recovery will be "slow in the next few years," and the unemployment rate will average 10 percent through the end of fiscal 2011, while the annual budget deficit will likely remain above $1 trillion, CBO chief Douglas Elmendorf told the House Budget Committee on Wednesday.
The CBO chief told the congressional panel that he expected economic growth in fiscal 2010, which ends Sept. 30, will be just 1.6 percent, and the unemployment rate will average 10.2 percent. The outlook for fiscal 2011 is not much better, he warned, saying that growth in the nation's gross domestic product (GDP) will barely accelerate to 1.8 percent and the unemployment rate barely budge, averaging 9.8 percent for the year.
Mr. Elmendorf, citing another in the string of forecasts that his well-respected nonpartisan office had developed, also warned that annual budget deficits are likely to top $1 trillion for this year and next and remain at stratospheric levels for years. The resulting public debt will make up a huge share of the overall economy and remain a constant threat to economic growth for the foreseeable future.
"It is true that as we push [publicly held debt] in this country to 60 percent of GDP at the end of this [fiscal] year and beyond that over the next few years, we're moving into territory that most developed countries stay out of," Mr. Elmendorf told the House budget panel. "That raises the risk" of seriously adverse economic consequences "every step that we go."