White House lowers economic growth forecast for 2008, \'09

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With economic growth slowing, the unemployment rate is projected toaverage 5.3% this year and 5.6% in 2009. The administration's oldforecast called for the jobless rate to climb to 4.9% this year andnext. The unemployment rate averaged 4.6% in 2007; it was 5.5% inJune.
"Because of the recent slower economic growth, the labor market islikely to remain sluggish for a period of time before returning tobetter performance," the White House budget office said.
The administration believes the jobless rate will drop back to 5.3%in 2010 and continue to dip in subsequent years, falling to 4.8% in2012 and 2013.
On the inflation front, consumer prices are now expected to rise3.8% this year, from the administration's old forecast of a 2.7%rise. Prices should calm down a bit next year, rising 2.3%. Still,that's higher than the old forecast of a 2.1% rise.
"Inflation has increased in recent years, in large part because ofsurging food and energy prices," the administration said. Oilprices, which had spiked to a record high of more than $147 abarrel, are now hovering around $124.
The new forecasts were contained in the budget office's updatedlook at the nation's balance sheets. A record $482 billion budgetdeficit is now being projected for next year, something the nextpresident will inherit.