White House forecast sees more job losses in 2009

WASHINGTON (Reuters) - The White House forecast on Friday that the U.S. economy would shed about 235,000 jobs a month this year, but that overall growth would pick up.

President George W. Bush's final economic report to Congress before leaving office next week estimated that the unemployment rate would jump to 7.7 percent in 2009 from 5.7 percent last year.

President-elect Barack Obama, who will be inaugurated on Tuesday, has said boosting the economy was a top priority and is seeking an $825 billion stimulus package.

"The actions taken by my administration in response to the financial crisis have laid the groundwork for a return to economic growth and job creation, and they are beginning to show some early results," Bush said in the report.

But the report expected more job losses this year.

The "Economic Report of the President" estimated that an average 235,000 non-farm jobs would be lost each month in 2009, about double the decline of 114,000 a month in 2008.

"The administration projects that employment will decline during the four quarters of 2009, with the job losses likely to be largest early in the year," the report said.

The U.S. economy was battered last year by a global credit crisis and recession which prompted the Bush administration to launch a $700 billion rescue package to help troubled financial sectors.

On the upside, the White House Council of Economic Advisers estimated real gross domestic product to grow at an annual rate of 0.6 percent in 2009 after a decline of 0.2 percent in 2008.

More robust economic growth of 5 percent was expected in each of the next two years. The U.S. has not had consecutive years of growth of at least 5 percent since 1972-73, according to government statistics.

The report also recommended that changes be made to the global financial regulatory structure to prevent crises like the ones that caused U.S. markets to plunge last year.

The current global financial system has outgrown its regulatory structures and needs a new regime that will encourage innovation while deterring excessive risk-taking, the report said.

"The current global financial crisis will create challenges for some time to come," it said.

"These challenges include developing a new regulatory structure for financial markets, unwinding programs put into place to stem the crisis and developing a sustainable framework for mortgage financing," the report said.

(Reporting by Tabassum Zakaria and David Alexander; Editing by Tom Hals)