Forget the better-than-expected rise in home prices from the authoritative Case Schiller Home Price Index, and the surprise rise in US consumer confidence, and the re-nomination of Ben Bernanke as Fed chairman; the most important economic news from the US overnight came from the Obama Administration and the Congressional Budget Office (CBO) and their estimates for Federal deficits for the next decade.

And, in those estimates forget the figures for so-called “out years”, just focus on estimates for the next 3-5 years, especially unemployment: it tells us just how sluggish the American economy looks like being for that time, short of a near-miraculous burst of low inflationary demand and growth around the world.

There will be very little improvement in the jobless picture by 2011-2012, despite a rise in growth to more than 4% by the end of 2012.

But more immediately, the rise in home prices rose for the second month in a row in June was better than expected with the prices of single family homes rising by 1.4% in June from May, after creeping up by 0.5% in May from April.

The Conference Board’s index of consumer confidence rose to 54.1 in August from 47.4 in July, ending three weak months. But it is a long way under the reading of 95 back in September a year ago, before Lehman Brothers failed.

But it is up, and coming with the news that Bernanke will be re-nominated, markets got a warm and fuzzy glow for a while, then were confronted by the deficit estimates from the White House and the CBO.

As confirmed by leaks over the weekend from the White House lifted its forecast for the budget deficit between 2010 and 2019 to a total of about $US9 trillion.

The White House forecast the US economy would shrink by 2.8% this year compared with its earlier 1.2% estimate. It also expects unemployment to pass 10% and stay higher than 8% until the end of 2011.

The White House said the deficit will drop to 5% of GDP by 2012, but public debt as a percentage of GDP will rise from 48% this year to almost 69% by 2019.

The CBO cut its 2009 deficit forecast to $US1.59 trillion, or 11.2% of projected gross domestic product, easing to $US1.4 trillion or 9.6% of GDP in 2010.

But the CBO boosted its 10-year forecast by $US2.7 trillion from its March forecast to a total of $US7.140 trillion.

But the CBO saw unemployment peaking at 10.4% next year from an average of 9.3% this year, before falling to 9.1% in 2011. That is just 0.3% below where the rate is now. And that’s despite what could be seen as optimistic growth forecasts from 2012 onwards.

“In CBO’s forecast, real GDP grows by 2.8% between the fourth quarter of 2009 and the fourth quarter of 2010, by 3.8% in 2011, and by an average of 4.5% in 2012 and 2013,” The CBO said.

“Interest rates are expected to remain at historically low levels for the next few years,” the CBO forecast, a sign that the US economy will be operating well below its full potential for some years to come. For example, the CBO said it saw yields on 10-year bonds trading around 4.4% in 2012, compared with the current rate of 3.43%.

“The rate on 10-year Treasury notes averages 3.3% in 2009, 4.1% in 2010, and 4.4% in 2011.

And economists are now starting to worry what happens to people whose unemployment benefits run out.

The administration has already been forced to commit billions of dollars more to extend jobless benefits have already been extended. According to some estimates, more than 500,000 of the jobless will run out of their 20-53 weeks of benefits by the end of September — and another million will run out by the end of the year. More spending looms to extend benefits because the political cost is too much, not with more than 34 million Americans receiving some sort of food aid as of May this year, or well over 10% of the population.