So Much For the Rosy Scenario… Obama Was Way Off on GDP Growth Rate, Too
The Obama Administration promised us that the US unemployment rate would be 5.2% at the end of his term. We all know how that worked out. Team Obama also promised that GDP growth would be 4.0% in 2011. The Fed announced this week that they see GDP at 2.7% to 2.9% this year.
It looks like those Keynesian policies didn’t work out so well, huh?
Here’s a look back at that rosy scenario we were promised.
The Wall Street Journal reported this in February 2009:
The famed Rosy Scenario, coined in the early days of the Reagan White House when large tax cuts and higher defense spending were assumed to be paid for in part by strong economic growth, is a cornerstone of the Obama administration’s first multiyear budget.
After contracting at a 1.2% rate in 2009, a more modest drop than the Congressional Budget Office and Blue Chip Consensus forecasts assume, the White House sees growth domestic product growth snapping back by 3.2% next year and then 4% or higher the three years after that.
The last time the economy preformed that well was the New Economy heyday of the late 1990s.
The 2010-2013 forecasts are slightly more optimistic than CBO but much rosier — in some cases by well over one percentage point — than what the Blue Chip Consensus calls for. A separate private-sector gauge, the Survey of Professional Forecasts, also projects a much weaker economy this year and next.
As a result, the unemployment rate at the end of President Barack Obama‘s term in 2013 will be just 5.2% , according to the White House. The rate currently sits at 7.6% , and many economists expect it to climb past 9% before the recession ends.