CBO Director Doug Elmendorf testified [PDF] yesterday that he agrees with more pessimistic forecasts about the economy. That means that he expects weak growth to begin in the latter half of this year as the recession hits its trough, with unemployment numbers -- which will hit double digits in the next year -- starting to turn around six to 12 months after that. The gap between real and potential GDP, shown above, will likely exist until 2013, as businesses are still not investing and the housing market remains stagnant. Elmendorf's testimony does offer some "green shoots" -- there are signs that consumer confidence is turning around and that bank's ability to lend is increasing. However, the main talking point is "uncertainty" -- so much has happened to the economy so quickly in the last year that it is hard for forecasters to predict what will happen. -- Tim Fernholz
