The White House projects that the unemployment rate will still be above 9 percent next year as President Obama seeks to win a second term.
The new figures from the White House budget office predict that the economy will grow by just 1.7 percent this year, a full percentage point less than the administration predicted at the beginning of 2011. The economy grew by just 0.7 percent in the first half of the year, the slowest pace since the recession ended two years ago.
But the White House does not forecast the economy sliding back into recession.
The White House report also sees the budget deficit topping $1.3 trillion for the fiscal year that ends at the end of this month. That is $300 billion less, or 20 percent lower, than the White House's estimate in February of $1.65 trillion, but slightly higher than last year.
That would still be the third-highest deficit on record.
The White House attributed the revised estimate to a combination of higher-than-expected tax revenues and lower-than-expected government spending.
The White House also projected that deficits over the next decade will fall by $1.45 trillion mainly because of last month's deal to reduce government spending in exchange for increasing the nation's borrowing limit. Now a congressional "super committee" will try to find another $1.5 trillion in deficit reduction by Thanksgiving.
"We need to get back on a sustainable fiscal path and we must invest in long-term economic growth and job creation," White House budget director Jacob Lew said.
Obama plans to outline his ideas for jump-starting the economy and creating jobs in a primetime address to a joint session of Congress and the nation on Sept. 8. That date was negotiated only after the White House and House Speaker John Boehner, a Republican, disagreed over Obama's request to give the speech a day earlier -- Sept. 7 -- at a time when the Republicans had scheduled a presidential debate.
White House Press Secretary Jay Carney said Thursday that Obama's proposals will improve the economic forecast if it's passed.
"Economists will be able to look at this series of proposals and say that based on history, based on what we knew, based on their collective expertise, that it would add to economic growth and it would cause an increase in job creation," Carney said.
The nationally broadcast address from Congress will put Obama face to face with conservative Tea Party Republicans who are sure to fight any new "stimulus" spending that he might propose.
"By its own admission, the Obama administration's record on job creation and fiscal responsibility is abysmal," said Rep. Paul Ryan, chairman of the House Budget Committee.
"Today's report confirms that the president's policies have failed to deliver on his promises of job creation, deficit reduction, and much needed economic growth," he said. "Since taking office, the president's policies have made a difficult situation worse."
Rep. Chris Van Hollen, the Democrat on the Budget Committee, said the report is another reminder that the super committee must focus on job creation as it searches for savings.
The White House report said that higher oil prices, an economic slowdown in Europe, continuing weakness in the housing sector and the disruption in global supply chains after the devastating earthquake in Japan have dragged down the economy. Uncertainty over raising the U.S. debt ceiling hurt as well, the report said.
"In sum, economic growth and job creation, while positive, have not been strong enough to bring the unemployment rate down to an acceptable level," the budget office reported.
No president in modern times has won re-election with unemployment as high as 9 percent, and Obama's poll numbers have suffered in recent weeks amid a steady drumbeat of bad economic news.
The White House delayed released of the report, which was due in mid-July, as the debate over the debt limit and accompanying budget deal wore on. The delay caused a need to factor in new economic data released over the summer -- including downward revisions in the growth in gross domestic product -- and the result was a gloomier forecast than it would have issued based on information available in June.
Fox Business' Peter Barnes and The Associated Press contributed to this report.