Outlook for the Budget and the Economy

In CBO’s updated projections, real gross domestic product (GDP) grows by 3.1 percent in 2018 and by 2.4 percent in 2019 before slowing in the following years.

Expanding on its earlier long-term baseline projections, CBO shows how the federal budget and the economy would evolve under three scenarios in which laws would be changed to continue certain policies now in place, leading to higher debt.

CBO has developed “rules of thumb” that show how changes in four key economic variables might affect revenues, outlays, and deficits. An interactive workbook allows users to see the budgetary effects of their own alternative scenarios.

If current laws remain generally unchanged, CBO projects, federal budget deficits and debt would increase over the next 30 years—reaching the highest level of debt relative to GDP in the nation’s history by far.

In CBO’s projections, the economy grows relatively quickly this year and next and then more slowly in the following several years. The federal budget deficit rises substantially, boosting federal debt to nearly 100 percent of GDP by 2028.

Under current law, deficits in CBO’s baseline projections continue to climb over the next decade, driving up federal debt. Economic growth remains modest, at about 2.0 percent through 2018 and then 1.9 percent later in the period.

If current laws remained generally unchanged, the United States would face steadily increasing federal budget deficits and debt over the next 30 years—reaching the highest level of debt relative to GDP ever experienced in this country.

CBO compares its economic forecast, as presented in An Update to the Budget and Economic Outlook: 2016 to 2026, with historical experience and discusses why economic growth in coming years is projected to diverge from historical trends.

CBO discusses several uncertainties in the outlook for the U.S. economy, as described in An Update to the Budget and Economic Outlook: 2016 to 2026.

CBO projects a $534 billion deficit in fiscal year 2016, about $100 billion more than in 2015. If current laws generally remained unchanged, the deficit would increase from 2.9 percent to 4.9 percent of GDP over the next decade.