Economic growth in the United States is expected to remain weak for several years and unemployment will likely stay above 8 percent for another three years, the head of the non-partisan Congressional Budget Office said Wednesday.
In a blog post accompanying the agency's latest estimates of the U.S. budget situation, CBO Director Douglas Elmendorf said the economy could be in for a prolonged downturn, exacerbated by recent turmoil in financial markets.
"Although total output began to expand again two years ago, the pace of the recovery has been slow, and the economy remains in a severe slump," Elmendorf wrote.
The CBO expects the U.S. economy to grow somewhere between 2.4 and 2.6 percent annually this year and next, followed by just 1.7 percent growth in 2013. And that slow growth will take its toll on employment.
The Labor Department earlier this month said the July unemployment rate was 9.1 percent. The CBO expects that to drop to 8.9 percent in the fourth quarter of this year and to 8.5 percent in the fourth quarter of next year, when voters decide on whether President Obama deserves a second term in office. One third of the Senate and all 435 House members also face voters.
The CBO forecasts the unemployment rate to average around 8.7 percent in 2013 and then fall to an average of 7.9 percent for 2014.
The agency, which is the official scorekeeper for Congress, said it expects the recently passed and lower interest rates to cut projected budget deficits in half over the next decade.
The United States is expected to post $3.487 trillion in cumulative deficits over 10 years, about $3.3 trillion lower than its previous estimate.
The federal deficit is projected to hit $1.28 trillion this year, slightly smaller than the last two years, but still the third largest deficit in 65 years.