An Update to the Budget and Economic Outlook: 2016 to 2026
Abstract
In fiscal year 2016, the federal budget deficit will increase in relation to economic output for the first time since 2009, the Congressional Budget Office estimates. If current laws generally remained unchangedan assumption underlying CBOs baseline projectionsdeficits would continue to mount over the next 10 years, and debt held by the public would rise from its already high level. CBOs estimate of the deficit for 2016 has increased since the agency issued its previous estimates in March, primarily because revenues are now expected to be lower than earlier anticipated.1 In contrast, the cumulative deficit through 2026 is smaller in CBOs current baseline projections than the shortfall projected in March, chiefly because the agency now projects lower interest rates and thus lower outlays for interest payments on federal debt. Nevertheless, by 2026, the deficit is projected to be considerably larger relative to gross domestic product (GDP) than its average over the past 50 years. CBOs economic forecastwhich serves as the basis for its budget projectionsindicates that, after a tepid expansion in the first half of 2016, economic growth will pick up in the second half of the year. That faster pace is expected to continue through2017 before moderating in 2018. In CBOs estimation, the faster growth over the next two years will spur hiring, increase employment and wages, and put upward pressure on inflation and interest rates. In the latter part of the 10-year projection period, however, output will be constrained by a relatively slow increase in the nations supply of labor.
Document Details
- Document Type
- Technical Report
- Publication Date
- Aug 01, 2016
- Accession Number
- AD1015882
Entities
Organizations
- Congressional Budget Office