The White House on Monday trimmed its outlook for U.S. economic growth in 2013 and 2014, citing "serious headwinds" from European austerity measures and a slowdown in China, as well as across-the-board budget sequester cuts at home.
The mid-session budget and economic update highlighted the lingering impact of the recession that has stymied President Barack Obama's economic agenda.
In the review, the White House said it expected gross domestic product to rise 2.0 percent this year and 3.1 percent next year - less than the 2.3 percent and 3.2 percent forecast in Obama's budget of April 10.
The unemployment rate has fallen some over the past six months but remains stubbornly high - at about 7.5 percent, because of what the Obama administration says is the lingering impact of the worst recession since the Great Depression.
Ahead of tough negotiations with Congress on spending cuts and raising the U.S. debt limit, the White House slashed its estimate of the current year's fiscal deficit to $759 billion, or 4.7 percent of GDP, from its April forecast of $973 billion.
Republicans have been focusing on deficit reduction and spending cuts, while Obama has argued for programs to spur jobs, financed in part by higher taxes on the wealthy.
White House Budget Director Sylvia Mathews Burwell said in a statement that the report shows that Obama's budget "achieves the core goal of fiscal sustainability by putting federal debt on a declining path as a share of the economy."
Congress, however, is not expected to pass Obama's budget this year.