CBO regularly publishes a forecast of what the economy would look like if current laws governing taxes and spending remained unchanged; that forecast provides a basis for the agency's projections of federal revenues, outlays, deficits, and debt. A key element in CBO's economic forecast is its projections of potential (maximum sustainable) output, which are based mainly on estimates of the potential labor force, the flow of services from the capital stock, and potential total factor productivity (TFP) in the nonfarm business sector.
This presentation describes CBO's most recent projections of potential output, highlighting the importance of TFP growth. It discusses potential improvements to CBO's method of forecasting TFP and how artificial intelligence might affect productivity.
