(Updates with economic forecasts, Obama quote beginning in fifth paragraph.)
June 3 (Bloomberg) -- President Barack Obama is delaying the annual mid-year White House review of economic and deficit forecasts as his administration continues negotiations with Congress on a long-term debt-reduction plan, an administration official said.
The review, typically released in July, will be put out later this summer, the official said on condition of anonymity to discuss the matter. Talks between the administration and congressional leaders on cutting the deficit as well as the series of negotiations over spending levels for this year that continued into April prompted the delay, the official said.
The report is an update on how the White House views the economy compared with its forecast delivered in February. At that time, the Obama administration forecast gross domestic product will increase 2.7 percent this year, compared with the 3.6 percent growth it predicted in its 2010 mid-year review. It said the economy next year will expand 3.6 percent.
The unemployment rate was forecast to average 9.3 percent this year and 8.6 percent next year.
A series of recent economic reports suggest the economic recovery has hit a soft patch. Over the past two weeks, private economists at firms such as J.P. Morgan, Goldman Sachs and Macroeconomic Advisers cut their forecasts for economic growth in the current quarter.
Job growth slowed to 54,000 in May, down from 232,000 in April and the smallest gain in eight months, the Labor Department reported today. The unemployment rate rose to 9.1 percent, the highest level this year.
U.S. consumer spending slowed in the first quarter of the year and confidence levels have since fallen. Manufacturing growth, a consistent contributor to the recovery, weakened across the globe in May. The S&P/Case-Shiller Index released May 31 showed U.S. home prices in March dropped to the lowest level since 2003, further eroding home equity available to Americans.
The 1.8 percent growth rate in the first quarter, a decline from 3.1 percent the prior quarter, also came in below forecasters’ estimates.
The state of the economy will be a central issue for Obama as he seeks re-election in 2012.
“Even though the economy is growing, even though it’s created more than 2 million jobs over the past 15 months, we still face some tough times,” Obama said today in Toledo, Ohio, where he spoke to workers at a Chrysler Group LLC plant.
The administration has been negotiating with Republicans, who control the House, over cutting the federal government’s long-term deficit as well as effort to raise the legal debt ceiling. There have been four meetings between Vice President Joe Biden and six congressional leaders, with the next one set for June 9.
The urgency to reach agreement increased yesterday after Moody’s said it may put the U.S. government debt rating on review for a downgrade if no progress is made on raising the $14.3 trillion debt ceiling by mid-July.
In 2009, Obama delayed the review by one month, citing his first year in office. The official said the review has been postponed approximately 16 times in the past 38 years.
--With assistance from Mike Dorning and Roger Runningen in Washington. Editors: Joe Sobczyk, Robin Meszoly
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