The White House Council of Economic Advisers, in its annual report released Monday, said the economy is poised for an accelerated recovery in 2014.
The CEA argues in the report the President Obama’s policies over the last five years prevented a much worse economic downturn and should be continued with targeted spending increases outlined in the 2015 budget released last week.
“The economy is well situated for a pickup in growth, with households having made progress in deleveraging and building wealth, with housing demand gathering momentum, with inflation that is low and stable, and especially with the four-year period of fiscal consolidation now largely behind us,” the report concludes.
It predicts an uptick in real gross domestic product growth to 3.3 percent from 2.3 percent next year and for the economy to stay at roughly that level for four years. The predictions were developed in November and used to craft the latest Obama budget request. The White House will update its forceast mid-summer.
The aging population is blamed for a slowdown in 2018 and beyond and the White House calls for immigration reform to counteract a decrease in labor force participation.
A key reason is the two-year budget deal and year-long debt ceiling increase passed by Congress in recent weeks.
“This past year’s budget brinksmanship has receded into legislation that will provide some stability during the coming year. If international economies and markets are stable or improving, that would support exports. The energy sector has also supported sustainable growth with substantial increases in domestic energy supply, declines in energy imports, and progress toward reducing carbon dioxide emissions,” the report says.
White House advisers Jason FurmanJason FurmanWhite House warns AI could heighten inequality White House report makes case against ObamaCare repeal Unemployment drops to 4.6 percent MORE Betsey Stevenson and Jim Stock point out that only the United States and Germany have returned to pre-crisis levels in output per working-age person.
“The fact that the United States has been one of the best performing economies in the wake of the crisis supports the view that the full set of policy responses in the United States made a major difference in averting a substantially worse outcome—although it in no way changes the fact that more work remains to be done,” they state.
In addition to infrastructure investment, the report calls for business tax reform and an avoidance of any shutdowns or other fiscal policy shocks in the years ahead.
Republicans argue that the data in the report supports a dimmer view of the recovery and that Obama’s policies need to be repealed.
“This recovery has produced $1.3 trillion less in real GDP, 5.5 million fewer private payroll jobs, and $3,850 less in real disposable income per capita than an average post-1960 recovery would have produced,” said Joint Economic Committee Chairman Kevin BradyKevin BradyWeek ahead: Trump gets to work with ObamaCare, regs in his crosshairs GOP waiting to hear from Trump on ObamaCare Trump and Mnuchin can turn the page to new tax policy MORE (R-Texas).
“The President’s policies of higher taxes, Obamacare, and new regulations are keeping businesses on Main Streets across America on the sidelines,” he added.