The Budget and Economic Outlook: 2017 to 2027
Abstract
In fiscal year 2016, for the first time since 2009, the federal budget deficit increased in relation to the nations economic output. The Congressional Budget Office projects that over the next decade, if current laws remained generally unchanged, budget deficits would eventually follow an upward trajectorythe result of strong growth in spending for retirement and health care programs targeted to older people and rising interest payments on the governments debt, accompanied by only modest growth in revenue collections. Those accumulating deficits would drive debt held by the public from its already high level up to its highest percentage of gross domestic product (GDP) since shortly after World War II. CBOs estimate of the deficit for 2017 has decreased since August 2016, when the agency issued its previous estimates, primarily because mandatory spending is expected to be lower than earlier anticipated.1 However, the current projection for the cumulative deficit for the 20172026 period is about the same as that reported in August. CBOs economic forecastwhich underlies its budget projectionsindicates that under current law, economic growth over the next two years would remain close to the modest rate observed since the end of the recession in 2009. Nevertheless, economic growth would continue to outpace growth in potential (maximum sustainable) GDP and thus continue to reduce the amount of underused resources, or slack, in the economy. The result would be increases in hiring, employment, and wages, along with upward pressure on inflation and interest rates. In the later part of the 10-year projection period, output growth would be constrained by a relatively slow increase in the nations supply of labor. CBOs current economic projections differ from those it published in August because of revisions involving several factors that determine potential output.
Document Details
- Document Type
- Technical Report
- Publication Date
- Jan 01, 2017
- Accession Number
- AD1025359
Entities
Organizations
- Congressional Budget Office