The U.S. unemployment rate edged down to 9.1 percent in July, representing a slight decline from the 9.2 percent rate logged the month before. Though 116,000 jobs were added during the month, many economists are increasingly pessimistic about future job growth prospects for the remainder of the year.
According to a report from The Wall Street Journal, as officials in Washington take their summer recess, government analysts continue to release troubling economic news.
Though the government had previously projected the unemployment rate would dip below nine percent by the end of 2011, shocks to the global economy have prompted a reassessment of prior forecasts.
The Congressional Budget Office
released its midyear update of its budget and economic projections this week, a closely watched appraisal of the U.S. economy, and those hoping for an upbeat forecast were largely disappointed.
The Budget Office stated in its report that structural issues still plague the U.S. labor economy, and that businesses have continued to save money and forego investing, fueling a cycle of stagnant economic activity, CBS News reports.
While the budget office "expects that the recovery will continue," economists at the government agency also believe that GDP growth will remain at depressed levels for the next several years. As officials are set to further slash the federal budget, it is unlikely that government spending will help fuel a significant recovery, analysts assert.
The Budget Office said it expects GDP growth to increase by 2.3 percent this year. What's more, it projects economic activity will expand only slightly next year, hitting 2.7 percent. Newly enacted austerity measures will likely cause a moderate slowdown in the economy in 2013, the Budget Office concluded, but it expects growth to pick up at an average of roughly 3.6 percent from 2013 to 2016.
The gloomy economic forecast will further hurt the already ailing labor economy
, the Budget Office report projects. The government forecasts the unemployment rate will fall from its current 9.1 percent level to 8.5 percent in the fourth quarter of next year. However, it expects it to remain above 8 percent until 2014.
"Weakness in the demand for goods and services is the principal restraint on hiring, but structural impediments in the labor market - such as a mismatch between the requirements of existing job openings and the characteristics of job seekers (including their skills and geographic location) - appear to be hindering hiring as well," according to the report.