01 September 2011 22:42 [Source: ICIS news]
WASHINGTON (ICIS)--The Obama administration on Thursday said US economic growth is likely to average only 2.4% this year, and the unemployment rate likely will continue at 9% or slightly above for this year and through 2012.
With US gross domestic product (GDP) growth projected at a mediocre 2.4% for this year and slightly better in 2012, the review indicates it will not be possible to bring the nation’s unemployment rate below 9% before the end of next year.
In normal economic times, US GDP would be expected to grow at an annual rate of 3–3.5%.
GDP expansion at 2.5% or better is needed just to accommodate population growth and new workers entering the job market for the first time.
If the OMB's forecast for 2.4% GDP growth for 2011 is to be achieved, the US economy would have to accelerate sharply in the second half of this year to overcome the 0.4% growth rate of the first quarter and the second quarter's modest 1% expansion.
To make any headway against the nation’s current 9.1% unemployment rate, annual GDP growth would have to be at a robust rate above 3%.
In its mid-session review, OMB also said in his major jobs policy speech next Thursday, Obama would present “a package of meaningful, new initiatives to promote economic growth and create jobs”.
Those proposals will include new measures that will accelerate job growth in the near term, the review said, and would include a mix of tax cuts, “innovative infrastructure ideas” and strategies aimed at the long-term unemployed and “other sectors of the economy that are in particular need”.
That last reference to sectors of the economy in particular need is thought to indicate a new Obama administration tactic aimed at reviving the ?xml:namespace>
Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy
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