Latest Congressional Budget Outlook For 2012-2022 Released, Says Real Unemployment Rate Is 10%

Tyler Durden's picture

What do the NAR, Consumer Confidence and CBO forecasts have in common? If you said, "they are all completely worthless" you are absolutely correct. Alas, the market needs to "trade" off numbers, which is why the just released CBO numbers apparently are important... And the fact that the CBO predicted negative $2.5 trillion in net debt by 2011 back in 2011 is largely ignored. Anyway, here are some of the highlights.

  • 2012 Deficit: $1.1 trillion; 2013 Deficit: $0.6 - yes, we are cackling like mad too...
  • Unemployment to remain above 8% in 2012 and 2013; will be around 7% by end of 2015; to drop to 5.25% by end of 2022.
    • This forecast is utterly idiotic and is completely unattainable unless the US workforce drops to all time lows and the US economy generates 300,000 jobs a month for 10 years
  • Needless to say, CBO assumes the best of all worlds in this meaningless forecast
  • But here is the kicker: "Had that portion of the decline in the labor force participation rate since 2007 that is attributable to neither the aging of the baby boomers nor the downturn in the business cycle (on the basis of the experience in previous downturns) not occurred, the unemployment rate in the fourth quarter of 2011 would have been about 1¼ percentage points higher than the actual rate of 8.7 percent" translation: CBO just admitted that the BLS numbers are bogus and real unemployment is 10%. Thank you

Here is the CBO's alternative forecast which is a little closer to reality:

CBO has developed budget projections under an “alternative fiscal scenario,” assuming—instead of current law—that certain tax provisions that have recently expired or are set to expire (including most of the provisions in the 2010 tax act but excluding the Social Security payroll tax reduction) are instead extended, that the AMT is indexed for inflation after 2011 (starting from the 2011 exemption amount), that Medicare’s payment rates for physicians’ services are held constant, and that the automatic enforcement procedures of the Budget Control Act do not take effect. Under this scenario, deficits from 2013 through 2022 would average 5.4 percent of GDP, compared with the 1.5 percent in the baseline.

Some view on SSN and Medicare:

  • At $1.6 trillion in 2012, federal outlays for Social Security, Medicare, Medicaid, and other health care programs will make up more than 70 percent of mandatory spending (or 10.4 percent of GDP). Spending for those programs will rise by $1.5 trillion from 2012 to 2022— accounting for nearly all of the growth in mandatory spending over that period. By 2022, spending for those programs will represent more than 80 percent of mandatory spending and 12.8 percent of GDP.
  • CBO estimates that, under current law, outlays for Social Security will total $770 billion in 2012, or 5.0 percent of GDP. Over the next decade, spending for Social Security benefits will climb steadily (by an average of about 6 percent per year) as the nation’s elderly population grows and as average benefits rise. By 2022, CBO estimates, Social Security outlays will total $1.3 trillion, or about 5.5 percent of GDP.
  • At $856 billion, gross outlays for Medicare, Medicaid, and other mandatory federal programs related to health care accounted for just under 40 percent of mandatory spending (not including offsetting receipts) in 2011.6 CBO estimates that outlays for those programs will dip to$847  billion in 2012, or 5.5 percent of GDP, reflecting a decline in Medicaid spending. In CBO’s baseline projections, spending for health programs more than doubles between 2012 and 2022, rising by an average of nearly 8 percent per year and reaching $1.8 trillion in 2022. That spending is expected to represent 7.3 percent of GDP in 2022, an increase of nearly 2 percentage points from its share this year.

And some thoughts from the excel goal seek geniuses in DC on the collapse of the US welfare state:

Because of the aging of the population and rising costs for health care, the set of budget policies that were in effect in the past cannot be maintained in the future. In CBO’s projections for 2022 under the alternative fiscal scenario, gross outlays for all federal programs apart from Social Security, the major health care programs, and net interest are projected to be 7.8 percent of GDP, lower than in any year during the past 40 years and well below the 11.4 percent of  GDP that such outlays have averaged over that period. Yet the budget deficit in 2022 under that scenario is projected to be 6.1 percent of GDP. Therefore, to keep deficits and debt from causing substantial harm to the economy, policymakers will need to allow federal revenues to increase to a much higher percentage of GDP than the average over the past 40 years, make major changes to Social Security and federal health care programs, or pursue some combination of the two approaches.

So, if everything that is set to happen, happens, there will be "substantial harm" to the economy, and the CBO just happily assumes all these things will be fixed just in time? Brilliant.

But probably the most imporant part is the CBO's discussion on the labor force participation, and the general unemployment rate:

Participation in the Labor Force. The unemployment rate would be even higher than it is now had participation in the labor force not declined as much as it has over the past few years. The rate of participation in the labor force fell from 66 percent in 2007 to an average of 64 percent in the second half of 2011,  an unusually large decline over so short a time. About a third of that decline reflects factors other than the downturn, such as the aging of the baby-boom generation. But even with those factors removed, the estimated decline in that rate during the past four years is larger than has been typical of past downturns, even after accounting for the greater severity of this downturn. Had that portion of the decline in the labor force participation rate since 2007 that is attributable to neither the aging of the baby boomers nor the downturn in the business cycle (on the basis of the experience in previous downturns) not occurred, the unemployment rate in the fourth quarter of 2011 would have been about 1¼ percentage points higher than the actual rate of 8.7 percent. By CBO’s estimates, the rate of labor force participation will fall to slightly above 63 percent by 2017. The dampening effects of the increase in tax rates in 2013 scheduled under current law and additional retirements by baby boomers are projected to more than offset the strengthening effects of growing demand for labor as the economy recovers further.

Don't waste time reading this: none of what is predicted will actually happen. But at 165 pages it makes a good paperweight.


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Everybodys All American's picture

Thanks for wasting my time and money.

SWRichmond's picture

"Tomorrow, tomorrow, I luv ya, tomorrow, your only a day away!"

MillionDollarBonus_'s picture

I trust that informed US citizens are analysing this data and making their own judgements right now, so that they can make informed and intelligent voting decisions in the coming elections. It is up to ALL Americans to make sure they monitor government spending and evaluate the statistical effectiveness of each spending program (discounted by opportunity cost) so that we can make objective voting decisions. This is how democracy should work. 



Mr Lennon Hendrix's picture

Yes.  When the PTB need fiscal spending up, they use data points to justify it (10% unemployment).  When they are politicking and campaigning, they use data points to justify it (8%).  I will likely vote for no one, maybe I will write in Ron Paul.  At least that way DIEBOLD won't rape my vote.

MillionDollarBonus_'s picture

Government decisions are trustworthy because they are monitored by a well informed public. The public are informed enough to monitor and evaluate all government decisions, however they are they are simply not informed enough to make the decisions themselves. It’s just common sense.

Mr Lennon Hendrix's picture

Robot.  MillionDollarBonus is a robot.  Terminate.  Terminate....

trav7777's picture

The CBO is just doing a projection assuming that this downturn is cyclical and there is another economic BOOM coming like has happened in the past 30 or 40 years.

Roger O. Thornhill's picture

The madness continues. This cycle we are in is the one on the washer that says "full spin." The one at the end of the mini cycles that is finally necessary to spin the debt out of the system. We'll all be extremely dizzy at the end of that ride.

Also, what is astonishing is that The Romney and Newt puppets are being floated as an alternative to Obama. Sadly the media maintains this joke and the dumber percentage of the voters continues to fall for the nonsense. They don't realize they are being played for fools yet again. Soon to be poor fools.

Hint: The candidate the media hates the most is probably the one we need.

viahj's picture

This cycle we are in is the one on the washer that says "full spin."


that's the last stage before then "end of the cycle" at least my washing machine doesn't cycle continously but in the world of fiat...who knows.


DoChenRollingBearing's picture

+ 1

Indeed the madness continues.  I explore this at my blog.  "How Long (Can This Keep This Going On)?" is the new article there.  I also write about gold, review Barron's, and other material I hope will entertain my readers.  Would you like a look?  Gmail me at my name and assure me you will behave.  I make people jump through this hoop to keep out spammers & bots.

Shocker's picture

True, unfortunately we are probably alot higher than 10%

This downturn that its called, is nothing like we seen before. Other times there was less debt, and actually some industry/ invention that pulled us out. This time, there really isn't anything.

The green movement, well you see how that is going.


blindfaith's picture



Com'on everyone, Milliondallarbonus is pulling everyone's leg with his comments.

Tyler we need a "this is a joke" and scarcasm buttons really bad!!!

Nobody For President's picture

Ah Mr. H, you gotta love MDB. He (or she) has elevated sarcasm to high art, with the (usually) perfect tone to mimic the legion of sycophant politicians; asshat blowhard economic media talking  (and writing) heads; and ivory-towered academic hacks that write grade and high school Civics textbooks.


ZH *needs* MDB to remind us of why ZH is an important part of our real news day. I personally think MDB is a Tyler, he's too fucking good not to be.



LawsofPhysics's picture

You know what else is common sense?  Rewarding savers and ending capital mis-allocation and mal-investment by allowing deflation and companies to fail.  Let the market pick the winners and loser, not the government.

MillionDollarBonus_'s picture

Mis-allocation is a subjective term. You are simply assuming that all preferences are equally valuable in the market place. However I would argue that Nobel Prize winning economists have more valuable preferences than redneck Nascar fans. Yes, you heard me - I want resources to be allocated by PROFESSIONALS ONLY.

economics1996's picture

The real unemployment rate, compared to the 1990s, is 11.2% by my calculations and 11.4% by Tyler's calculations.


blindfaith's picture



your not counting the 900 and something dead folks who voted in the South Carolina Primary in the caculation are you?

Tyler...where is the scarcasm button?

economics1996's picture

MDB, Central planning always fails.  It can never suceed because markets are way more complex than any one person or government.

DaveyJones's picture

shouldn't ten percent of congress go upaid to gain insight on the problem?

JW n FL's picture



Government decisions are trustworthy because they are monitored by a well informed public. The public are informed enough to monitor and evaluate all government decisions, however they are they are simply not informed enough to make the decisions themselves. It’s just common sense.

You are brilliant! and that is why so few get you.

Please Never Stop and Thank You!

God Bless You and Yours!

signed, Christian Constitutionalist

JOYFUL's picture

I believe you are struggling with this one M$B.  As I sense you are on the edge of an epiphany, let me help you out with the wording on this one....staying, of course, as close as possible to your original intent!

Government monitors the public because they are simply not trustworthy, and evaluates their decisions by being well informed of this monitored public's sense of just how badly it's decisions are perceived to be denuding them of their basic dignities and financial integrity, so as to keep the pace of their expropriation of the common man's wealth below the level that would provoke a sensible reaction on the part of it's victims.

Hey, don't mention it...It's just what any libertarian would do for another bud!

StychoKiller's picture

My judgement right now:  Most American Ignorati are too busy trying to keep putting food on the table to monitor the insane spending of the Govt.  Cranial-Rectal inversion has numerous cures, I suggest you investigate them!

TruthInSunshine's picture

I will call CBO's "real" unemployment rate of 10% and raise it to 15%.

That's pure unemployment (no underemployment in that SWAG).

Throw in underemployment, with this groups ranks swelled tremendously by those formerly working for a company, but now considered "self-employed,"which would include people who want to work full time, but who are now only working 15 or 20ish hours a week, and I'd be surprised if U6 was NOT an honest 21%.

I'm not using any other methodology except for what I've read, seen and heard, melted into an amalgam, and then adding a 50% government 'confidence fairy' bullshit factor.

John Williams has better estimates (and higher estimates for the unemployment/underemployment rate) based on the use of a better sampling methodology based on the use of actual facts and arithmetic than mine.


#Green shoots. Summers/Winters of Recovery. Turning the corner. Save and/or creating trillions of jobs. Winning the future.

blindfaith's picture



You keep this scary stuff up and the kids are going to start wineing.

The only way THIS administration is going to get to these hopium unemployment numbers is if all the Irish, Itatilian, German, English, Spanish, Asian, French and Swedish immigrants that came here over the last 100 years all self-deport ( the new word for our consideration thanks to Kris Kobach the author of anti immigration legislation).

Silver Bug's picture

I think we can all agree. The unemployment rate is most certainly not what the government is telling us. We can see that with our own eyes!

LiquidityandLunacy's picture

They're not useless....if youre constantly long the market.


Don Birnam's picture

Rest assured that the "real" unemployment rate is much higher than 10%. The calculus employed today is statistical jabberwocky: the true rate lies upwards of 15%.

JW n FL's picture

show them this when they are looking for numbers..

source and site your facts.. give them no where to go but to the truth.. dont make it about your ego make it about educating them.. so that we have more people on our side when the time comes.


Raging Debate's picture

Well said JW in FL. The adversity for many Americans will come through one's own family. Careful not to get too 'aggggg--iiah--taaaaded' eh eh. The word I am mocking is 'agitated'.

If your stuffed into one of those places to force you to become 'un-aggggg-iah-taaaaaded' because your family is worried about you (your probably the provider of the family and losing your income is a thought too much for them to bear) then I have advice in advance. I went first into hades for you, I am a bit macabre like that in experiments. I am talking about medical facility. New wings of agitated people they can bill you for being agitated.

1) Be a gent to the ladies having to play a male role for too long. They will bend over backwards for you and such need guidance and are really lost in the maze of why or why not.

2) Such places are a treasure trove of people needing real guidance and love. Participate in every group and speak right up to lead them as the Spirit leads.

3) Get over it fast when your done, it was a $7k scam played on me. If this is the worst we see in America then it is recoverable. The facts are the facts and we can still go and demand them from ideaological countrymen now lost in the maze.

As an aside the research gave me insights for Pharmaceutical sector consulting I wouldn't have had otherwise. So the cost of the experiment is recoverable and what I will do with the Pharma's should reduce over-prescribing. Perhaps win-win-win. Stop being so chicken shit and squeamish about a couple weeks out of your life to help your countrymen.

quintago's picture

You got some link love from Drudge ... you on the map now son...

tarsubil's picture

Holy crinkey. I was so confused when I clicked on that and was sent here. This is real bad for those that are behind like me. Time to get that 0% cc and buy all the Au and Ag I can. Hey, drudge people, don't worry. Everything is bone! Buy AAPL and FCBK! Forget coins so silly.

SheepDog-One's picture

Sure mom and dad Im gettin straight "F's" right now and Im expelled from school, but next report card I'll surely be on the Honor Roll! Now hand me more allowance!

Signed, The Clowngress.

Dreadker's picture


Ruffcut's picture

Next everyone will get trophies, too.

I knew a guy who wrote reports like this and he said he didn't know where half of the information really came from.

Instead of tea bags sent to congress, we should send a roll of toilet paper and tell them to wipe their mouth after talking.

taniquetil's picture

True Story:


At my old high school, the administration actually did away with the honor roll because parents of kids who weren't on the honor roll complained that it was elitist, discriminatory and excluded kids who weren't as academically inclined.

tabasco71's picture

That story sucks and I hate what it represents.

You know, in my day and even now, if someone told me I was crap, it made me try harder.

LFMayor's picture

yes, but you bear the scars of that trauma, you poort thing.  We have counselors standing by that can help you.  Visa, MC or PPO/HMO accepted.

Goldilocks's picture

From movie, The Incredibles (2004)

Helen: I can't believe you don't want to go to your own son's graduation.
Bob: It's not a graduation. He is moving from the 4th grade to the 5th grade.
Helen: It's a ceremony!
Bob: It's psychotic! They keep creating new ways to celebrate mediocrity, but if someone is genuinely exceptional...

Dreadker's picture

Ahhhhh.... Infinite growth all layed out with numbers and stuff... Shame most people still don't understand exponential growth that has and is going on...

YesWeKahn's picture

This is how Ben Bernanke forcasts the inflation.

lizzy36's picture

Baseline scenerio otherwise known as "mark to unicorn and rainbow scenerio".

Looking to call a book in the FY2013 scenerio. Whereby the full year deficit is ONLY $585B (assumes bush tax cuts expire). 

Over/Under for $1m. I will take the over.....looking for a speculator (cough dumb(est)money) to take the under. Anyone. Anyone at all?

swissaustrian's picture

Tuesday morning humor...

GeneMarchbanks's picture

That... was kinda expected, no?


urbanelf's picture

I really think the Harry Potter series has gone off the deep end.

Vincent Vega's picture

Projections, exclusions, and assumptions...wish I could run my finances that way.

kito's picture

most people use binoculars or a telescope to see far ahead, the cbo uses a kaleidoscope..................