Douglas Elmensdorf, director of the Congressional Budget Office, warned that “there is still a good deal of pain to come” as he discussed the economy and fiscal issues with reporters this morning.
“There’s still a good deal of pain to come,” Elmensdorf said at a Breakfast with Reporters event hosted by the CS Monitor. “In broad terms, the view that we had in January of an economy that we expect to grow slowly I think still holds. What we said in January was that we would only get unemployment down in the neighborhood of 5 percent by 2018 and I don’t know exactly what the new forecast will show but it will be something I think in that ballpark.”
Elmensdorf reiterated the CBO’s warning of a 2013 recession. “Our estimate is that, if current law unfolds, that the economy will actually shrink in size during the first half of the next year along the lines of one of the paths that the National Bureau of Economic Research has deemed a recession,” he said.
By “current law,” he was referring to the tax increases that will come with the expiration of the Bush tax cuts and the spending cuts scheduled as part of the debt-ceiling deal last year.
“There is still a great deal of elevated unemployment to come,” Elmensdorf also said. “It really is striking how much higher our long-term unemployment is today than it has been in past economic downturns.”
