White House predicts 2 million more jobs in 2012

NEW YORK (CNNMoney) -- The United States economy is on the road to recovery, the White House said Friday, with stronger job growth expected this year.

But income inequality and Europe's debt crisis could still pose challenges, according to a report released by President Obama's Council of Economic Advisers.

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Obama battles job crisis

The U.S. lost 4.3 million jobs in President Obama's first 13 months in office. Track his progress since then.

"While actions taken to prevent a deeper recession and to strengthen the recovery have made a difference, the nation is still recovering from that profound crisis and the problems that led to it," the Economic Report of the President said.

The document, which totals 446 pages, is the administration's blueprint for the economy, which outlines a plan to "recover, rebalance and rebuild." Much like Obama's recent State of the Union address, it focuses heavily on income inequality, and building an America where "everyone gets a fair shot."

One way to do that is job creation. While 1.8 million jobs were created last year, the economy still needs to add about 5.6 million jobs to get back to 2008 employment levels -- and that's without accounting for population growth.

New forecasts from the Council of Economic Advisers estimate 2 million jobs will be added in 2012.

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The report calls attention to a "manufacturing revival," along with a rise in exports. Obama traveled to a Boeing factory in Everett, Wa., Friday to champion his policies of promoting manufacturing and exports.

"Two years ago, I set a goal of doubling U.S. exports over five years," Obama said in a White House press release. "Today, we're on track to meet that goal -- ahead of schedule."

One major challenge the White House points to is Europe's debt crisis. Europe buys about a fifth of U.S. goods that are exported and about 40% of U.S. service exports.

"Global and U.S. economic performance will depend, in part, on the swift resolution of problems in the euro area," the report said.

Payroll tax cut, meet $4 gas

While it's true that manufacturing jobs have been a bright spot in the U.S. recovery and exports have risen rapidly over the last two years, Obama often fails to mention the rise in imports too.

When imports rise faster than exports, it subtracts from U.S. economic growth. Since Obama announced his intention to double exports, they have risen 33.5%, but imports have grown even faster, up 36%.

The report comes just hours after Congress passed a bipartisan bill extending the payroll tax cut and unemployment benefits. Those programs are more likely to soften the blow of rising gas prices, than add to economic growth.

"The payroll tax cut provides some cushion for families in case they see their costs go up, possibly because of gasoline prices or for other reasons over the course of the year," said Alan Krueger, chairman of the Council of Economic Advisers.