US economic growth to speed up to 3.1pc, White House says | South China Morning Post
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US economic growth to speed up to 3.1pc, White House says

Obama administration expects falling jobless rate to boost economy this year, after last year's 1.7pc gain, but congressional office tips 2.7pc pace

PUBLISHED : Tuesday, 11 March, 2014, 10:45am
UPDATED : Wednesday, 12 March, 2014, 5:21am

The White House forecast more robust economic growth in the United States this year than last year and a further pick-up in the economy next year.

The US economy is expected to expand 3.1 per cent this year, faster than last year's 1.7 per cent. Growth would pick up to 3.4 per cent next year, the White House said on Monday.

The government also forecast that unemployment would ease to an average of 6.9 per cent this year. The jobless rate, which reached a high of 10 per cent in 2009, fell to a five-year low of 6.6 per cent in January.

Many economists say the unemployment rate has dropped in part because many people have stopped looking for work. The US labour force participation rate has fallen from more than 66 per cent before the start of the recession to 63 per cent.

The government's growth projection was more optimistic than the 2.7 per cent projection of the non-partisan Congressional Budget Office.

In contrast, the White House jobless rate forecast for this year was more pessimistic than the 6.8 per cent CBO projection.

Almost five years after the end of the recession, the economy is still growing modestly, and the unemployment rate, while declining, has remained persistently high.

The government, mindful that President Barack Obama's popularity has slipped in opinion polls and worried that the Democrats could lose ground to the Republicans in elections in November, has emphasised an agenda focused on employment and growth.

The White House pointed to the declining budget deficit and the improved housing market as among factors pointing to the likelihood of stronger growth.

White House Council of Economic Advisers chairman Jason Furman said ramped up US energy production, slowing health care costs and advances in technology would also drive stronger economic performance.

But Obama, who has vowed to narrow the gap between the rich and poor, wants Congress to raise the federal minimum wage to US$10.10 an hour from US$7.25 and spend more to help speed up economic growth.

Last week, he proposed a budget for fiscal 2015 that would spend US$56 billion above the US$1.014 trillion Congress agreed to in January.

The additional spending would fund education, training and defence projects and would be offset by higher revenues obtained by closing tax loopholes that benefit wealthy people.

The White House's economic forecasts are based on the assumption that Congress would pass the president's proposal, but it was roundly rejected by most Republicans and is unlikely to be become law.

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