About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

1 CBO's Current View of the Economy from 2023 to 2025 1 (December 15, 2023)

handle is hein.congrec/cboctvwote0001 and id is 1 raw text is: he Congressional Budget Office periodically updates its economic forecast to ensure that its projections reflect recent economic develop- ments and current law. CBO will publish its budget and economic projections for 2024 to 2034 early next year in its annual Budget and Economic Outlook. This report provides details about CBO's most recent projections of the economy through 2025, which reflect economic developments as of December 5, 2023 (see Table 1). CBO develops its economic projections so that they fall in the middle of the range of likely out- comes under current law. Those projections are highly uncertain, and many factors could lead to different outcomes. In CBO's latest projections: - Output growth slows in 2024 and rebounds in 2025. The growth of real gross domestic product (GDP, adjusted to remove the effects of inflation) falls from 2.5 percent in 2023 to 1.5 percent in 2024 as consumer spending weakens and investment in private nonresidential structures contracts. In 2025, real GDP growth rises to 2.2 percent, supported by lower interest rates and improved financial conditions. (Unless this report indicates otherwise, annual growth rates are measured from the fourth quarter of one year to the fourth quarter of the next.) - Labor market conditions soften in 2024. Growth in payroll employment slackens, and the unemployment rate rises from 3.9 percent in the fourth quarter of 2023 to 4.4 percent in the fourth quarter of 2024 and remains close to that level through 2025. The labor force grows at a moderate pace, with an increased contribution to that growth stemming from projected immigration over the next two years.1 1. See Testimony of Julie Topoleski, Director of Labor, Income Security, and Long-Term Analysis, before the Joint Economic Committee, CBO's Demographic Projections (November 15, - Inflation continues to slow over the next two years and approaches the Federal Reserve's target rate of 2 percent. As measured by the price index for personal consumption expenditures (PCE), inflation falls from 2.9 percent in 2023 to 2.1 percent in 2024, reflecting softer labor markets and slower increases in rents. In 2025, inflation rises slightly, to 2.2 percent, as downward pressures on inflation in food and energy prices ease and stronger economic activity modestly increases price pressures for some categories of services. - Interest rates on Treasury securities peak in 2024 and then recede through 2025. The Federal Reserve holds the federal funds rate (the rate that financial institutions charge each other for overnight loans of their monetary reserves) between 5.25 percent and 5.50 percent through the first quarter of 2024 and then reduces it in response to slowing inflation and rising unemployment. The rate on 10-year Treasury notes increases to 4.8 percent in the second half of 2024 and begins to fall in mid-2025. Compared with its February 2023 projections, CBO's current projections exhibit weaker growth, lower unemployment, and higher interest rates in 2024 and 2025.2 The agency's current projections of inflation are mixed relative to those made in February 2023. - Slower economic growth during 2024 (by 1.0 percentage point) and 2025 (by 0.4 percentage points) largely occurs because of slower-than-projected growth in consumption, investment, and exports. The 2023), www.cbo.gov/publication/59683. CBO expects to publish its next comprehensive demographic projections in January 2024. 2. See Congressional Budget Office, The Budget and Economic Outlook: 2023 to 2033 (February 2023), www.cbo.gov/ publication/58848.

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most