Yesterday we blogged about the economic scenarios the government will be using to "stress test" the banks. Simon Johnson of Baseline Scenario says he finds the government's baseline scenario of 2.1% growth in gross domestic product next year optimistic.
Today the Wall Street Journal considers another scenario, from the Congressional Budget Office. The Journal calls it "rosy." The CBO forecasts that GDP will drop just 2.2% in 2009, followed by 1.5% growth in 2010. By the time 2011 rolls around, the CBO expects major improvement — 4.2% GDP growth.
In terms of unemployment, the CBO's projection and the stress test's baseline are roughly in line, with each predicting joblessness to rise to more than 8% in 2009 and nearly up to 9% in 2010.
As you can see in this chart, it's not as if the CBO sees an easy road ahead.
Comments
Discussions for this story are now closed. Please see the Community FAQ for more information.