CBO’s Current View of the Economy in 2023 and 2024 and the Budgetary Implications

This report describes the Congressional Budget Office’s current view of the economy over the next two years, compares that view with projections of other forecasters and with those that CBO made previously, and explains the implications for the federal budget. CBO’s current view of the economy incorporates information available through November 16, 2022; the agency’s most recent projections, published in May 2022, used information available through March 2, 2022.

According to CBO’s current assessment, economic growth will probably be slower in 2023 than the agency projected in May 2022, reflecting recent developments (including higher interest rates), and faster in 2024, as the economy recovers. Rates of unemployment, inflation, and interest will probably be higher over the next two years than CBO projected in May 2022. Slower economic growth and higher rates of unemployment, inflation, and interest increase federal deficits and debt.

CBO will publish its budget and economic projections early next year in the agency’s annual Budget and Economic Outlook. As part of the process of preparing that report, CBO is in the midst of revising its economic forecast. The agency is providing information in this report now in response to interest expressed by Members of Congress. The report is more comprehensive than would have been possible if CBO’s standard process for developing its forecast had not already been underway.

Because CBO has not completed its forecast, this analysis focuses on the middle two-thirds of ranges for economic projections that indicate uncertainty about the possible outcomes for output, unemployment, inflation, and interest rates. The forecast published early next year will include point estimates.