Economy

In CBO’s projections, deficits remain large by historical standards, and federal debt grows to equal 93 percent of GDP by 2029. As the effects of fiscal stimulus wane, projected economic growth falls back below the historical average.

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.

This report examines how various demographic factors relate to labor force participation, how economic conditions are likely to affect that rate over the next decade, and what keeps people from participating in the labor force.

How much do companies benefit from corporate inversions? In this report, CBO analyzes the reasons for and effects of inversions. CBO also projects how inversions and certain other strategies will affect future U.S. corporate tax revenues.

Under the President’s proposals, budget deficits from 2018 through 2027 would total nearly one-third less than those in CBO’s baseline projections, ranging between 2.6 percent and 3.3 percent of GDP, down from 3.6 percent in 2017.

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.

The United States has 14 preferential trade agreements with 20 of its trading partners. In CBO's view, the consensus among economic studies is that, all told, such agreements have had small positive effects on the U.S. economy.

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 describes the procedures it uses to develop a market-based estimate of the cost of new U.S. commitments to the International Monetary Fund that reflects the small risk that the IMF could incur large losses.

In calendar year 2014, ARRA—which was enacted in 2009—raised real GDP by between a small fraction of a percent and 0.2 percent and increased the number of full-time-equivalent jobs by between a slight amount and 0.2 million, CBO estimates.

Since the recession ended in June 2009, employment has risen sluggishly and the unemployment rate has fallen only partway back to its prerecession level. This CBO report discusses the reasons for the slow recovery of the labor market.

During the three years following the recession in 2008 and 2009, the economy’s output grew at less than half the rate seen, on average, during other economic recoveries in the United States since the end of World War II.