WASHINGTON ? Delivering its mid-year economic forecast earlier this week, the Congressional Budget Office (CBO) said it doesn?t foresee a recession but that slow growth will keep unemployment above 8% until 2014, The Wall Street Journal reports.
Assessing economic data through early July, the CBO projected that inflation-adjusted GDP will rise only 2.3% this year and 2.7% next year, with the U.S. economy failing to operate at its potential ? meaning that labor and capital are fully employed ? until 2017.
In the interim, the CBO said to expect a weak job market, with unemployment to fall from 9.1% today to 8.5% in the fourth quarter of 2012, remaining above 8% until 2014.
?Weakness in the demand for goods and services is 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,? the CBO said.
The CBO also said that inflation, which increased in the first half of this year, will decrease in the second half of the year and then stay below 2% over the next several years.
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