My colleague Brad Plumer has a great, detailed breakdown of the winners and losers in the budget proposal President Obama released today. But he left out one group: out-of-work Americans.
Last month, the Labor Department reports, 11.7 million Americans were looking for a job but couldn’t find one – an unemployment rate of 7.6 percent. Another 2.3 million people said they wanted a job but did not count as unemployed because they haven't actively looked for work.
That unemployment rate is at least 2 percentage points above the rate that economists have historically considered “full employment” – the level at which the economy is operating most efficiently. And it’s going to take a while to get back there.
According to the projections in Obama’s new budget, America won’t return to full employment until about 2018. That assumes the projections are correct; in recent years the Obama administration's forecasts have proven to be overly optimistic, forecasting that the economy would soon enter a period of speedier growth that has still not arrived.
Every president includes unemployment forecasts in the annual budget document. In his first budget, the FY2010 budget released in the midst of the 2009 recession, Obama predicted unemployment would fall below 5.5 percent by 2013. Two years later, he predicted full employment around 2016.
Now it’s 2018. That’s not a trend the millions of unemployed Americans like to see.
Note: One other thing has changed in the forecasts. In 2009, Obama’s economists considered full employment to be 5.0 percent. Now it’s up to 5.4, a reflection of the damage that long-running, highly elevated unemployment has done to the workforce.
Note #2: Those sympathetic to the Obama administration might argue that the president has, in those past budgets, proposed stimulus measures that Congress did not enact, and has turned more abruptly toward tighter fiscal policy than the president has advocated, which could draw part of the blame for the economy's underperformance.