WASHINGTON -- The Bush administration, after being ridiculed by Democrats for an overly optimistic jobs forecast this year, yesterday significantly reduced its forecast for new jobs that will be created in 2005. It slightly boosted its estimate for overall economic growth.
In its new economic outlook, the administration predicted the economy will grow by 3.5 percent next year and will create an additional 2.1 million jobs.
A year ago, the administration was forecasting 3.6 million jobs would be created in 2005 after 2.6 million this year.
Democrats called the forecast for 2004 overly optimistic, an assertion that proved to be accurate. Through November, just 1.3 million jobs were created, half of the administration's forecast.
The economy has struggled to create new jobs during the recovery from the 2001 recession. Businesses have been successful in boosting production with fewer workers.
A problem facing the administration with its 2004 forecast was that it was prepared in late November 2003 as part of the administration's budget preparations but not released until early February when the budget was sent to Congress.
In between, the jobs picture darkened significantly with a string of weak monthly figures, making the administration's forecast look even more optimistic.
Gregory Mankiw, chairman of the president's Council of Economic Advisers, told reporters the administration had decided to release the 2005 forecast in early December, when it was completed, rather than waiting two months for it to be possibly overtaken by events.
"We thought this would minimize the confusion we saw last year by waiting until February," Mankiw said.
Mankiw said the administration's forecasts for economic growth, employment, and inflation were well within the range of private sector forecasts.
Private analysts generally agreed with that assessment.
"On job growth, they are just slightly more optimistic than I am and they are well within the bounds of possibility," said David Wyss, chief economist at Standard & Poor's in New York.