Tuesday, July 31, 2012

The President's Rosy Scenario

I have been looking through the Obama administration's midsession review, which was released a few days ago.  I found the comparison between the adminstration's economic forecast and the Blue Chip consensus of private forecasters noteworthy.  (See the table called "Table 3. Comparison of Economic Assumptions.")  Here is the projected growth of real GDP, fourth quarter to fourth quarter, of Team Obama in red, and private forecasters in blue.

2012 2.6 2.0
2013 2.6 2.5
2014 4.0 3.1
2015 4.2 3.0
2016 3.9 2.9

Of course, the Administration's optimistic forecast feeds directly into its budget projection.  If we get the slower growth that private forecasters predict, we will get less tax revenue and larger budget deficits than the Administration projects.