In CBO’s updated projections, real gross domestic product (GDP) grows by 3.1 percent in 2018 and 2.4 percent in 2019. In both years, growth in actual GDP outpaces growth in potential (that is, maximum sustainable) GDP, creating excess demand in the economy and further lowering the unemployment rate.
In CBO’s forecast, that excess demand leads to higher inflation and interest rates—which, along with slower growth of federal outlays, restrain demand and slow GDP growth after 2019. By 2022, the excess demand in the economy disappears. From 2023 to 2028, real GDP grows by about 1.7 percent each year—close to CBO’s estimate of the economy’s maximum sustainable rate of growth.