CBO’s Economic Forecast: Understanding the Slowdown of Productivity Growth

CBO regularly publishes economic projections that are consistent with current law—providing a basis for its estimates of federal revenues, outlays, deficits, and debt. A key element in CBO’s projections is its forecast of potential (maximum sustainable) output, which is based mainly on estimates of the potential labor force, the flow of services from the capital stock, and potential total factor productivity in the nonfarm business sector.

This presentation describes CBO’s most recent 10-year projections of potential output. It also discusses possible underlying causes for the slowdown of growth in total factor productivity.