Shorter CBO

by Dave Schuler on February 5, 2013

The comedy writers at the Congressional Budget Office have produced an economic projection for 2013 to 2023. Let me summarize it for you: we’re due.

For me the biggest knee-slapper is illustrated in the chart above, depicting annual GDP growth. Let me translate it for you. They’re projecting that economic growth from 2014 to 2018 will proceed faster than it did from 2000 to 2006 and faster than it did for much of the 1990s. Here’s their explanation:

After the economy adjusts this year to the fiscal tightening inherent in current law, underlying economic factors will lead to more rapid growth, CBO projects—3.4 percent in 2014 and an average of 3.6 percent a year from 2015 through 2018.

Why? Underlying economic factors or, said another way, we’re due.

I’m tempted to make a list of the questionable assumptions they’ve made. It would be hard to know where to stop. Let me just give a few:

  • Faster economic growth from 2014-2018 than was experienced from 2002-2006.
  • No recessions from the present until 2023.
  • If there is a recession during the period, it will not be met with fiscal stimulus (otherwise their deficit projections fall apart).
  • Between 2014 and 2017 roughly 250,000 new jobs will be created per month (we haven’t seen anything like that for decades).

For me the most striking prediction: they’re predicting the longest expansion in U. S. history. These guys just slay me.

Of course, if GDP just proceeds along the line we’re on now, all of their other projections collapse, especially debt to GDP and employment. When you predict more of the same, you don’t need much to justify it. When you’re predicting a stunning, history-making boom, I think you need more than “we’re due”.

{ 26 comments… read them below or add one }

Icepick February 5, 2013 at 5:50 pm

For me the most striking prediction: they’re predicting the longest expansion in U. S. history.

Well, you see, they’ve got it all figured out now. And with perfect understanding they can now guarantee a perma-boom.

Steve Verdon February 5, 2013 at 5:50 pm

Obamanomics is a success!!

So, we can say for certain we are in an L-shaped situation.

As for going forward, its mostly baloney and not good baloney, but something you found at the bottom of the meat drawer in your fridge.

Icepick February 5, 2013 at 5:53 pm

Imagine how bad the economy would look minus about $800,000,000,000 of federal deficit spending.

Icepick February 5, 2013 at 5:55 pm

And remember, debt is just pulling future economic activity into the present. We’ve pulled a LOT of future economic activity into the present in the last several years. Imagine how big that boom would look if we hadn’t been robbing the future to patch up the present.

Dave Schuler February 5, 2013 at 6:18 pm

So, we can say for certain we are in an L-shaped situation.

I think the CBO is trying to torture the data into a U.

Icepick February 5, 2013 at 6:59 pm

I think the CBO is trying to torture the data into a U.

It’s not torture, it’s enhanced interrogation! Come on, man, get with the program!

Icepick February 5, 2013 at 7:37 pm

This isn’t the only good news the CBO has for us:

President Obama’s health care law will push 7 million people out of their job-based insurance coverage — nearly twice the previous estimate, according to the latest estimates from the Congressional Budget Office released Tuesday.

The rest here.

Dave Schuler February 5, 2013 at 7:45 pm

I’d say it’s working as intended.

Dave Schuler February 5, 2013 at 7:51 pm

Off-topic, icepick, I wanted to thank you for going above and beyond to slow global warming. A grateful world thanks you.

Icepick February 5, 2013 at 8:12 pm

Thank you for recognizing my selfless sacrifice. I’m a regular Ray Lewis – but without the deer antler velvet drops. I don’t work clean!

Lightwave February 5, 2013 at 9:13 pm

If these are the CBO’s predictions, then everyone in the Obama administration needs to be fired, and the President impeached.

8% growth in GDP? Sure, and 12-16% real wage inflation to go along with it, followed by an almost instant depression.

michael reynolds February 5, 2013 at 10:50 pm

Oh, look, a surprisingly underreported story:

http://www.bizjournals.com/sacramento/news/2013/01/31/sp-upgrades-californias-credit-rating.html

That would be S&P upgrading California’s credit rating. Hmm, I don’t recall that being predicted around these parts. Liberal governor. Entirely Democratic state legislature. Taxes raised by voter initiative. Credit improves.

And another underreported story: http://www.forbes.com/sites/joannmuller/2013/01/15/gm-expects-higher-profits-in-2013/ Apparently the doomed “Government Motors” is doing rather well for itself, despite European economic woes.

Apropos of which: http://in.reuters.com/article/2013/02/06/markets-global-idINDEE91500B20130206 It seems the death of the Euro has been delayed.

And there’s this: http://online.barrons.com/article/SB50001424052748704372504578285773583085056.html?mod=BOL_twm_da Record stock market. Which, unless I’m mistaken, means the stock market is expecting continued high profits.

And in personal news, I just started a business which was immediately profitable to the tune of a minimum 300k over the next 4 years. Hassle from “overregulation?” Effect of Obamacare? Um, none that I noticed.

Has the economic apocalypse been postponed?

Dave Schuler February 6, 2013 at 7:46 am

Apocalypse? No, I don’t expect that. What I expect is for the economy to continue along the same lines it has for the last four years—slow growth, slow job growth. I don’t expect a boom which is basically what the CBO is doing.

I rejoice in your success and hope that GM will right itself although, honestly, I don’t think there will be much space for it as Indian and Chinese cars come into the market at the low end and with the high end dominated by, mostly, German brands.

I think that Europe will continue to kick the can down the road for as long as they can because they really don’t know what else to do. How long? No idea.

It’s great that California’s had its credit rating upgraded. I hope that Illinois can follow suit although our governor and legislators have shown few signs that they’re willing to take the actions that are necessary to get our fiscal house in order. They’ve already nearly doubled the state income tax. Here in Chicago sales tax is the highest in the country. Property values continue to fall here so raising real estate taxes doesn’t seem like a particularly good move. And, as I’ve written at some length, I think that Illinois’s changing its public pensions policy will be harder than for many states due to Illinois’s unique constitutional guarantees.

One more thing about Illinois’s predicament. Raising tax rates and increasing revenue are two different things. Although Illinois nearly doubled its state personal income tax rate, revenues from personal income taxes rose substantially less than that. Maybe California will do better in that regard than we did. Illinois is not a destination state and doesn’t command the same sort of loyalty from its citizens that California does. At least some people living in Illinois can just move their homes and businesses across the state line to Indiana, Wisconsin, Missouri, or Iowa if they find Illinois too onerous.

Icepick February 6, 2013 at 8:05 am

Has the economic apocalypse been postponed?

Already happened for me and millions of other LTUEs. But then, you like the fact that millions are permanently unemployed, because it helps your party retain power. Fuck the little guy as long as you get rich and your party keeps power.

Icepick February 6, 2013 at 8:09 am

Did the CBO projections take into account a currency war? Note that this is basically an enforced devaluation of pay for those of us not fortunate enough to be, well, fortunate. But hey, anything to help out the GMs and Michale Reynolds of the world, and fuck the little guys. Goddamn them all.

Icepick February 6, 2013 at 8:13 am

I’d also note that California has the third highest unemployment rate in the country, even higher than Michigan’s rate. Chalk that up as another success for Reynolds, because he, like all Democrats, love high unemployment. It also helps to keep enough people poor so that Democratic Senators can find underage prostitutes to feed their urges. You know, making the figurative literal. Halle-fucking-lujah!

Janis Gore February 6, 2013 at 8:33 am

Icepick, you sound worse than I do. At least I have a house to sell.

Icepick February 6, 2013 at 9:47 am

Janis, I’ve been getting jerked around by lawyers and bankers for two years now, and I’ve had it. I’ve been getting jerked around by doctors for five years? six? I can’t even remember how long now, and I’ve had it. I’ve been getting jerked around by family for 45 years now and I’ve had it.

So some asshole comes along and tells me how wonderful California is because he’s getting rich (Probably through some crooked deal), then to Hell with him. My mother-in-law is in California too. She just lost her job of 20 years and has very poor prospects of getting another. My sister-in-law is in California too, has had her pay cut by 25% and counts herself lucky to still have a job.

California has the third highest unemployment rate in the Union, and that’s with an artificially low participation rate. If the part. rate were accurate CA’s UE-3 would probably be over 13%. That is counted as a success because Reynolds stock portfolio went up!

Evil people are in charge, and evil people are backing them. You can tell because they are celebrating their own success at the expense of everyone else.

So to Hell with them.

Dave Schuler February 6, 2013 at 9:53 am

In defense of Michael, I strongly suspect that any business dealing he’s involved in is on the up-and-up. I also doubt that he relies much on a stock portfolio. I think he’s strictly a royalties man.

I don’t honestly know what S&P is reacting to. Tax increase, probably. As I pointed out, there’s some distance between increasing the rates and increasing revenues. Gov. Brown’s recent speech was, I believe, somewhat overly optimistic about the state’s prospects for balancing its budget based on the rate increases. We’ll see.

Icepick February 6, 2013 at 10:00 am

I don’t honestly know what S&P is reacting to.

A multi-billion dollar lawsuit from the federal government. If they play ball and ease up on Democratic states they’ll be allowed to settle for a few hundred million. If not they’re going to get fully reamed by the power of the United States Federal Government.

Icepick February 6, 2013 at 10:11 am

And I honestly don’t give a fuck about a defense of Michael. The simple fact is this: He’s thrilled Obama got re-elected to keep impoverishing the people of the nation. Can’t tell me that bastard isn’t thrilled at my family’s impoverishment, because that’s what he voted for. Can’t tell me he isn’t thrilled that my two year-old is living in a neighborhood that’s just crawling with convicted child rapists, because that’s what he voted for. And on top of that, he is CROWING about it.

So fuck him, and fuck his family. He’s already voted for me and mine to go to Hell.

Drew February 6, 2013 at 2:14 pm

Tell us what you really think, ice.

Anyway, the apocolypse straw man makes Michael feel better about himself. He doesn’t understand that the difference between 1.5% growth and 2.5% growth is where the action is, where, for example, an ice is. And millions of others. As long as we don’t fall into the abyss he’s content with gun law bullshit and other maturbating points for the liberals.

As for Dave, I’d like to save his knees from permanent harm by CBO publications. As I pointed out elsewhere, they have upped the cost estimate on ObamaCare by about 40-45%. (Who knew) But in a most bizarre and irresponsible exercise childishly explain it away by “revenue increases.” Well, yeah.

If one of our management teams presented to the board a wildly increasing cost budget while noting, “oh, don’t worry, we’ll just increase our revenues and profits” the board would immediately go into an executive session to debate immediate termination, checking the water supply for hallucinogenics, or whether to call the psyche ward at the local hospital.

This is your government. This is Obama’s dream. This is Obama’s dream supported by steve and Michael. Its unexplainable to real financial minds.

Icepick February 6, 2013 at 3:46 pm

Tell us what you really think, ice.

I’d get arrested for sure in that case.

Icepick February 6, 2013 at 3:50 pm

As long as we don’t fall into the abyss he’s content with gun law bullshit and other maturbating points for the liberals.

Hey, subtract about $800,000,000,000 in annual federal deficit spending and we’re sliding back towards that abyss. We haven’t escaped it, we’re just spinning our wheels to stay in place. The whole damned thing will start sliding backwards when the rubber comes off the tires.

Its unexplainable to real financial minds.

Well, see, they’re upset with Bush’s deficits in the few hundreds of billions. They couldn’t possibly tolerate such profligate spending, so they must vote for Obama, because he only wants a one or two trillion dollar deficit. And one or two MUST be less than hundreds, yes?

TMLutas February 6, 2013 at 10:55 pm

Track the corrections and apply the appropriate avg correction to future pronouncements from that source. Is that so hard? Why isn’t everybody doing this already?

Steve Verdon February 7, 2013 at 12:15 pm

Wow Michael finds a few anecdotes of some good economics news so therefore the economy is great.

Michael, can you be anymore of a lickspittle for Obama and his economic team?

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