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White House Projects Shrinking Deficit

White House budget writers said the decline in the unemployment rate â¿¿ which has remained at 7.6 percent for two months â¿¿ has been faster than expected when they completed their initial forecast this year.

"Unemployment is now projected to decline somewhat more rapidly than in the budget projections," the report said.

The White House economic forecasts are more optimistic than those projected by the CBO and by a poll of top business economists by the Blue Chip Economic Indicators. But it is less upbeat than the projections of the Federal Reserve. For instance, while the White House believes the annual average unemployment rate in 2015 will be 6.5 percent, the Congressional Budget Office has forecast a 7.1 percent rate. The fed, on the other hand, has forecast an average 2015 jobless rate of between 5.8 percent and 6.2 percent.

The White House projects that unemployment will reach 5.4 percent in 2018, one year earlier than it projected in its budget. But joblessness is then expected to stabilize at that level for the next six years. That's still higher than the 4.6 percent unemployment the country averaged in 2006 and 2007.

The report also reflects $66.3 billion in dividend payments received by the Treasury from the government-affiliated mortgage lenders Fannie Mae and Freddie Mac. The government rescued Fannie and Freddie during the 2008 financial crisis after both incurred massive losses on risky mortgages. The companies received two of the largest bailouts of the crisis.

The recent payments reflect a housing recovery that has made the two lending giants profitable again. So far, Fannie has repaid $95 billion of the roughly $116 billion it received, while Freddie has repaid roughly $37 billion of its $71.3 billion.

Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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