Congressional Budget Office "says 8 (percent) unemployment till 2014!"
In an Aug. 24, 2011, Twitter post, U.S. Sen. John Cornyn said of the Congressional Budget Office: "CBO says 8 (percent) unemployment till 2014!" We’ll assume the Texas Republican doesn’t consider this fabulous news, though the predicted rate would be about a percentage point lower than the July 2011 national jobless rate of 9.1 percent, as reported by the U.S. Bureau of Labor Statistics. A reminder: The unemployment rate is a measure of the number of jobless people who are available for work and are actively seeking jobs, expressed as a percentage of the labor force. Did Cornyn recap accurately? The nonpartisan CBO’s summary of its latest economic projections says that with "modest economic growth expected for the next few years," the office expects the jobless rate to fall to 8.9 percent the fourth quarter of this year and to 8.5 percent the fourth quarter of 2012. And indeed, the report says, the rate will "remain above 8 percent until 2014." The nation’s gross domestic product grew 1 percent the second quarter of this year after growing .4 percent in the year’s first three months, the U.S. Bureau of Economic Analysis reported in August. According to the CBO forecast, the economy will grow slowly in coming years as the federal deficit shrinks, though the prediction about the deficit assumes, among other things, that Congress will not extend all the tax cuts launched under President George W. Bush and temporarily extended under President Barack Obama. In its full report, the CBO projects the annual unemployment rate to average 8.7 percent in 2012 and 2013, which would be an improvement on the 2010 and 2009 averages of 9.6 percent and 9.3 percent, respectively, but would be worse than the 2008 average of 5.8 percent, according to the Bureau of Labor Statistics. CBO forecasts the unemployment rate falling to an average of 5.4 percent in 2016 and 5.2 percent in 2017 through 2021, which would be the lowest rate since 2007, when the average was 4.6 percent. The report says the projected 5.2 percent rate in those years would match its expected "natural" unemployment rate for the period. Economists talk about a natural unemployment rate because even in a strong, healthy economy there is always some degree of employee turnover as businesses adopt new technologies and make other staff changes, and as a certain percentage of workers, for various professional and personal reasons, look for new jobs. Things are unsettled now, the CBO report says, with weakness in the demand for goods and services being the "principal restraint on hiring, but structural impediments in the labor market — such as a mismatch between the requirements of existing job openings and the characteristics of job seekers (including their skills and geographic location) — appear to be hindering hiring as well." "Other measures also show a great deal of weakness in the labor market," the report says. "The number of unemployed workers per job opening averaged about 4½ throughout the first half of 2011, down from an average of slightly over 6 in 2009 but still much higher than it was before the recession. In addition, the number of people who are employed part time but want full-time work averaged about 8.5 million in the first half of 2011, slightly below the number in the previous two years but still nearly double the pre-recession figure." The report continues: "Likewise, the share of unemployed people who have been out of work for a long time is unusually high. On average, 44 percent of workers who were unemployed in the first half of 2011 had been jobless for more than six months. Moreover, in mid-2011, 31 percent of unemployed workers had been jobless for at least a year. Those rates of long-term unemployment are unprecedented in the post-World War II era." We’re not judging here who’s responsible for the nation’s unemployment troubles, but how accurately Cornyn echoed the CBO’s projection. His statement rates True.
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