Not all unemployment rates are created equal
The recent CBO report projects real GDP growth to be a measly 1.4% this year, down from a rate closer to 3%, they claim, were it not for all the fiscal cuts baked in the 2013 cake:
CBO estimates that economic growth in 2013 would be roughly 1½ percentage points faster than the agency now projects [i.e., 1.4%] if not for the fiscal tightening.
By Okun’s rule, this suggests unemployment will stick at about 8% this year—about where it is—instead of a number a lot closer to 7% (Okun’s rule turns that 1.5% faster GDP growth into about 0.75 of a percentage point (ppt) lower unemployment). In fact, the CBO predicts that unemployment rate this year will move from all of 7.9% in the first half of the year to 8% in the second half. Thanks, dudes.
Actually, we should thank them for the warning—and even R’s are sounding Keynesian (OK, military Keynesianism, but still…) right now.