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OVERVIEW
Twice each year, when the Office of Management and Budget
issues economic assumptions for the federal budget, the Division of
Fiscal and Actuarial Services (DFAS) of the Office of Workforce
Security (OWS) uses those assumptions to develop financial
projections for the Unemployment Insurance system.
Using the economic assumptions, the paths of key program variables are
projected for the following five years. It is important to keep in
mind that the economic assumptions beyond the first two years are
not intended to be forecasts but rather are based on long-term
trends. Deviations from the assumed economic path could have a
significant effect on the accuracy of the estimates shown in the UI
Outlook.
Highlights of the analysis for the FY 2005 Budget Midsession Review are detailed below.
The total unemployment rate (TUR) is projected to average 5.7% in FY 2004, then to decline to
5.4% in FY 2005.
Under these assumptions:
- The insured unemployment rate (IUR) is projected to be 2.5% in FY 2004 and
2.3% in FY 2005. These are 0.2% below the FY 2005 President's Budget estimates,
due to claims levels declining faster than expected.
- State UI regular benefit outlays are estimated at $36.5 billion in FY 2004 and
$35.3 billion in FY 2005, compared to President's Budget estimates of $39.9 billion and $39.1 billion, respectively.
- Outlays from state trust fund accounts are projected to exceed revenues and interest earnings
by $3.0 billion in FY 2004. Income is projected to exceed outlays in FY 2005 for
the first time since FY 2000.
- Aggregate state reserves, net of loans, are projected to fall from $27.4 billion at the end of FY 2003
to $23.9 billion at the end of FY 2004, before starting to grow again. The projected low point for
the state funds is $3.4 billion higher than the President's Budget estimate.
- Borrowing from the Federal Unemployment Account (FUA) is projected to continue over the next
few years, with loan activity declining after this year. The outstanding balance at the end of FY 2005
is projected to be $0.5 billion, down from the $1.7 billion President's Budget estimate.
This is in part due to additional borrowing from alternative sources.
- No Reed Act distributions are projected through FY 2009.
Questions and/or comments regarding this document are welcomed. Please contact Mike Miller
(miller.michael@dol.gov), (202) 693-2930, or write to:
Office of Workforce Security
Division of Fiscal and Actuarial Services
Room S-4231
U.S. Department of Labor
200 Constitution Ave., NW
Washington, DC 20210
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