April Inflation Numbers Bring Investors Some Expected Good News Forbes Advisor

Investors Cheer As May Inflation Comes In Below Expectations

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Wayne Dougan investment writer

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Update 2024 June 12, 2024 11:21

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The inflation rate in May was lower than expected, which was good news for investors.

The Ministry of Labor announced on Wednesday, which was announced in May, rose 3. 3 % yea r-o n-year, rising 3. 4 % in April, down 3. 4 % in April. It was flat on the economist forecast of 0. 1 % from the previous month.

The consumer price index (CPI) in May is the latest indicator of the US Federal Reserve (Fed) in the battle with the ongoing inflation. The CPI inflation rate compared to the previous year was 9. 1 %, the highest level in 40 years in June 2022. Although it was on a decline between late 2022 and early 2023, the progress of inflation measures by the Federal Reserve (Fed) has slowed significantly in the past year. The Federal Open Market Committee (FOMC) has no intention of reducing interest rates from historic high levels, as there is no clear decline in inflation rates.

In the morning of Wednesday, investors welcomed good ingredients for inflation, and the S & Amp; P500 stock index rose 1 % immediately after the start of trading.

The Numbers

Inflation has become loose in many fields in the economy, but Americans are still dealing with s o-called sticky inflation in certain fields, making the Federal Reserve Council (Fed) even more difficult. Sticky inflation is inflation in specific products and services with relatively slow price fluctuations such as insurance, public transport, and rent.

In May, the core inflation, excluding fluctuating foods and energy prices, rose 0. 2 % yea r-o n-month and 3. 4 % yea r-o n-year. Economists anticipated 3. 5 % a year.

Other preceding indicators varyed:

Food prices rose 0. 1 % from the previous month and 2. 1 % from the previous year.
Energy prices fell 2 % yea r-o n-month, but rose 3. 7 % in the past 12 months.
The cost of housing continued to rise, increasing 0. 4 % compared to April and 5. 4 % compared to May 2023.

U. S. employment statistics announced by the Ministry of Labor in May exceeded the economy of 190, 000, an increase in economist forecasts. According to the Ministry of Labor, the U. S. wage in May rose 4. 1 % yea r-o n-year, and the unemployment rate rose to 4. 0 %.

In May, the consumer price index is the latest data that suggests that the Fed has returned to prices stable track. The Ministry of Commerce's core personal consumption expenditure (PCE) price index announced in May rose 2. 8 % in April, rising 2. 8 % in February and March. Core PCE is an inflation indicator recommended by the Federal Reserve (Fed).

Why CPI Matters

Inflation has been the No. 1 economic enemy of the Fed since early 2022, and FOMC has been actively changing US monetary policy to reduce inflation to only 2%of lon g-term goals. In July 2023, the Fed raised the target FF interest rate, 11 times since March 2022.

Since then, the Fed has not been rising or rising interest rates, but the current Fed Fund target of 5. 25%to 5. 50%is equivalent to high interest rates since 2001. FOMC has also redeemed and rolls off mortgage securities for government agencies, with a billion dollar securities and government agencies for government agencies, as well as the FOMC, which is over 7. 2 trillion. I plan to make the off tape.

In May, Powell FRB acknowledged that the inflated tone in 2024 exceeded expectations. "It is necessary to wait for the patience and restricted policies to play a role," said Powell. Most market experts expect that the Fed will not move to a focus on interest down until the policy proprietors are consistently changing to 2. 0 %.

When Will the Fed Cut Rates?

In May, the consumer price index has increased the possibility that the Fed will take interests later this year, but the pace and pace are still unclear.

According to the CME Group, the probability of maintaining the current interest rate in FOMC on Wednesday afternoon is 99. 9 %. However, it is 73. 2 % of the FRB to carry out at least 25 Basis points by September.

According to Skirer Winand, Legan Capital's Chief Investment Officer, the Federal Reserve (Fed) seems to observe the data for another few months before deciding on rate cuts.

"The consumer price index on Wednesday has fallen below expectations, and the Fed will be able to take interest in September as early as September. You can see a clear path to soft landing, and the Fed is 3 months as early as possible. We may come to save the market within the following, "Winand says.

Are We Heading Toward a Recession?

The US Federal Reserve Council (Fed) is trying to steer to balance, maintaining aggressive high interest rates to suppress inflation without falling into the US economy. Increased interest rates increase borrowing costs for companies and consumers to slow down economic activities.

Up to this point, the US labor markets and stock markets have been steadily converted to inflation and rising interest rates. The S & Amp; P500 index has risen 12. 6 % since the beginning of the year. Investors seem to expect soft landing in the US economy. Part of the stock high momentum in the first half of 2024 would have been supported by the expectation that the Fed will turn to interest down this year.

Increased interest rates have a negative effect on the evaluation of discounted cash flow, so interest reductions have historically benefited from growth stocks. The hig h-tech and growth stocks rising this year, from the view that the rate of rate is right there.

As of 2024, the rates of Russell 1000 Growth Index were 16. 1%and Russell 1000 Value Index rates were only 5. 9%. In the first quarter of S & amp; P500 technology revenue, artificial intelligence chip manufacturers' Nvidia (NVDA) increased by 25. 3%, contributing to the increase in profits of S & Amp; P500 as a whole. Technology Select Sector SPDR fund (XLK) has risen 13 % from the end of the year.

Nicholas chorus, a c o-founder of data trek research, is bullish in large US stocks in the current macro economic environment.

"I don't forget that the FOMC and the market will have a decrease in interest rates in FOMC and the market, depending on the FOMC and the market, and this supports both economic growth and stock values." say.

What’s Next?

On Wednesday afternoon, when FOMC announces interest rate decisions, large markets will continue.

Investors will particularly pay attention to the Fed's lon g-term outlook on inflation, interest rates, and GDP growth, which has changed from the previous forecast announced in March.

In addition, Wall Street will watch Powell's press conference after FOMC, exploring hints on what will be expected in the next FOMC in July and when the Fed may turn to interest.

Bill Adams, Chief Economist in Komelica Bank, says the unemployment may be an important economic indicator for the next few months.

"The unemployment rate has risen in the past year and a half, and the Fed policy representatives will be convinced that inflation will be even slower.

"If the core inflation rate continues to slow down in the next few months, the Fed will feel secure to take a quarter of the September meeting to a 1/4 % interest rate.

As the inflation rate decreases, each economic data becomes increasingly important in judging the timing of the Fed rising interest rate. Investors will pay attention to the May retail sales of the US Census Agency, which will be announced on June 18, to determine how much US consumers and retailers are holding in an inflation environment.

Following the good results of the Consumer Price Index (CPI), investors will also watch the May 28th core PCE inflation in May 28.

Projections at a Glance

The budget deficit will increase to $ 1. 6 trillion in FY2024 and $ 1. 8 trillion in FY2025, returned to $ 1. 6 trillion in FY2027. Later, the deficit steadily expanded, reaching $ 2. 6 trillion in 2034. According to the Gross Domestic Production (GDP), the deficit will increase to 5. 6 % in 2024 and 6. 1 % in 2025, reducing 5. 2 % in 2027 and 2028. Since 2028, the deficit ant i-GDP ratio has risen and returns to 6. 1%in 2034. After the Great Depression, the deficit surpassed this level only during World War II and the trend of Coronavirus, the 2007-2009, and Coronavirus.

The debt of the people will increase from 99 % of the GDP to the end of 2024 to 116 % of the highest level of GDP in history at the end of 2034. Even after 2034, if the current law does not generally change, the debt will continue.

The expenditure in 2024 was 23. 1 % of GDP, close to this level until 2028. After 2028, the increase in spending on the elderly programs and the increase in pure interest rate costs will boost expenditures, reaching 24. 1 % of GDP in 2034.

Доходав 17, 5 % в 2024 г 2024 г в в 2025 году сока Де нотых полож налоговогога 2017 года 2017 года. 2034 года.

Changes in CBO’s Budget Projections Since May 2023

Де г 2024 году на 0, 1 тонаров е, ч CBO поговало в гае 2023 говок да зод4-2 033 годов на 1, 4 тона Доларов (и на 7 поцов) м.

The largest driver of deficit reduction is the reduction in discretionary spending resulting from the Fiscal Responsibility Act and the Supplemental Continuing Appropriations Act of 2024.

The U.S. Economy

In 2024, unemployment rises and economic growth slows, partly as a result of tight monetary policy. Real (inflation-adjusted) GDP growth accelerates in 2025 after the Federal Reserve cuts interest rates in response to worsening economic conditions in 2024.

Interest rates rise in 2023, with the Federal Funds rate rising to its highest level since 2001. CBO projects this rate to begin to fall in the second quarter of 2024. Interest rates on 10-year Treasury bonds rise in 2024 and then decline through 2026.

Inflation (Personal Consumption Expenditures Price Index) slows significantly in 2023. CBO projects that inflation will slow further in 2024, reaching roughly the same level as the Federal Reserve's long-term target of 2%.

Changes in CBO’s Economic Projections Since February 2023

Real GDP growth will decline through 2026, remain stable through 2027, and then rise slightly.

Interest rates are generally high. The increase in interest rates from 2024 through 2027 mostly reflects the impact of stronger-than-expected economic growth in 2023. In subsequent years, rising capital income and declining personal savings will drive interest rates higher.

The labor force will grow as net immigration, which began to increase in 2022, remains high through 2026.

CBO's baseline budget and economic projections reflect the assumption that current laws governing taxes and spending will remain largely unchanged. Deficits and expenditures are adjusted to exclude the effects of shifts in the timing of certain payments when a fiscal year begins on a weekend. The 2024 deficit, excluding these adjustments, is $1. 5 trillion (5. 3% of GDP).

By the Numbers

The Budget Outlook, by Fiscal Year

See Chapter 1. When October 1 (the first day of the fiscal year) falls on a weekend, certain payments that would normally be made on that date are made at the end of September and therefore slip into the prior fiscal year. Spending and the deficit are adjusted to remove the effects of these timing differences.

The Economic Outlook, by Calendar Year

See Table 2-1. Domestic corporate profits are estimated for 2023.

Notes About This Report

The budget forecast of this report, including the impact of the law enacted by January 3, 2024, is based on the economic forecast of the US Congress Budget Bureau. These economic forecasts reflect the economic situation and information as of December 5, 2023, and are available on the CBO website (www. cbo. gov/data/budget-conomic-data#4). 。

Unless otherwise stated in this report, the fiscal year, which is mentioned in budget prospects, is all fiscal year, from October 1 to September 30, and is designated in the end of the year. The year, which is mentioned in the economic outlook, is the calendar year.

If October 1st is the weekend, payments that should be paid on that day will be paid at the end of September, so they will be shifted from the previous year. As a result, the number of payments paid in the previous fiscal year will increase, and the number of payments for the current fiscal year will decrease. This deviation of the payment time is reflected in the basic budget forecast of the ministry (see Table 1-1) because it affects the expenditure and deficit (or surplus). However, the shift at the time of payment is a adjustment base that often treats payments as not being affected by the shift, as it can complicate the comparison of annual expenditures and deficit and distort certain budget trends. Sign a line prediction (see Table 1-2, 1-4, 1-6, 1-9, as an example).

Unless otherwise described in this report, the past data shown in the text, table, and figures described the economic prediction will provide data available from the Economic Analysis Bureau and other sources in late January 2024. It is reflected. These data include values in the 4th quarter of 2023, which was not available at the time of CBO creation of the current prediction.

The text, table, and figures in the figure may not match the total because they are rounded.

Some of the charts of this report use a vertical rod network indicating the recession. (The recession continues from the peak of the economic circulation to the valley). The budget forecast for this report, including the impact of the law enacted by January 3, 2024, is based on the economic forecast of the US Congress Budget Bureau. These economic forecasts reflect the economic situation and information as of December 5, 2023, and are available on the CBO website (www. cbo. gov/data/budget-conomic-data#4). 。

Executive Summary

Projections for 2024

The text, table, and figures in the figure may not match the total because they are rounded.

Some of the charts of this report use a vertical rod network indicating the recession. (The recession continues from the peak of the economic circulation to the valley). The budget forecast of this report, including the impact of the law enacted by January 3, 2024, is based on the economic forecast of the US Congress Budget Bureau. These economic forecasts reflect the economic situation and information as of December 5, 2023, and are available on the CBO website (www. cbo. gov/data/budget-conomic-data#4). 。

The Budget Outlook

Deficits

Debt

Outlays and Revenues

The text, table, and figures in the figure may not match the total because they are rounded.

Changes in CBO’s Budget Projections

Some of the charts of this report use a vertical rod network indicating the recession. (The recession continues from the peak of the economic circulation to the valley).

The past version of this report often contained appendix of past budget data. These data and other supplementary data for this analysis are available on the CBO website (www. cbo. gov/publication/59710#data). In addition, general budget/economic terminology (www. cbo. gov/publication/42904), explanation of how CBO creates the base line budget forecast (www. cbo. gov/publication/58916), There is also an explanation about how the CBO creates economic predictions (www. cbo. gov/publication/53537), and there is also a past version (https://tinyurl. com/4dt4hshv) of this report.

The Budget Outlook, by Fiscal Year

The Budget Outlook in Six Figures

Total Outlays and Revenues

Financial deficit: $ 1. 6 trillion

99 of the debt GDP held by the people

Outlook for 2024–2034

Expenditure: $ 6. 5 trillion

Revenue 4. 9 trillion dollars

Outlays, by Category

CBO predicts that federal budget deficit will increase from $ 1. 6 trillion to $ 2. 6 trillion in 2024 for $ 2. 6 trillion. In addition, in the relationship with the economy, the deficit increased, and the collection of specific taxes that postponed tax payments temporarily increased the revenue in 2024, which was 5. 6 % of the GDP (GDP) in 2025. Is 6. 1 % of GDP. In 2026 and 2027, revenues will exceed their expenditures, and the deficit will reduce to 5. 2 % by 2027. After that, expenditures increase at a pace exceeding the revenue. In 2034, the deficit returned to 6. 1%of GDP, significantly exceeding the average deficit rate of 3. 7%in the past 50 years.

99 of the debt GDP held by the people

Revenues, by Category

The US Congress Budget has announced the base line prediction of what the federal budget and economy will be over the next 10 years if the law to manage taxes and expenditures is generally changed. There is. This report is the latest version.

99 of the debt GDP held by the people

Total Deficit, Net Interest Outlays, and Primary Deficit

99 of the debt GDP held by the people

Changes in CBO’s Baseline Projections of the 10-Year Deficit Since May 2023

Revenue 4. 9 trillion dollars

Federal Debt Held by the Public

The debts held by the people are increasing year by year in proportion to the economy, reaching 116 % of GDP in 2034. From 2024 to 2034, obligatory expenditures and interest expenditures will increase in discretionary expenditures, revenue, and economic growth, and will increase their debts. This trend continues, and in 2054, federal debt reached 172 % of GDP. The past version of this report often contained appendix of past budget data. These data and other supplementary data for this analysis are available on the CBO website (www. cbo. gov/publication/59710#data). In addition, general budget/economic terminology (www. cbo. gov/publication/42904), explanation of how CBO creates the base line budget forecast (www. cbo. gov/publication/58916), There is also an explanation about how the CBO creates economic predictions (www. cbo. gov/publication/53537), and there is also a past version (https://tinyurl. com/4dt4hshv) of this report.

99 of the debt GDP held by the people

Outlook for 2024–2034

Financial deficit: $ 1. 6 trillion

99 of the debt GDP held by the people

The Economic Outlook

Economic Growth

Expenditure: $ 6. 5 trillion

Interest Rates

Revenue 4. 9 trillion dollars

Inflation

Changes in CBO’s Economic Projections

The Economic Outlook, by Calendar Year

See Table 2-1. Domestic corporate profits are estimated for 2023.

Outlook for 2024–2034

CBO's current projections project the deficit in 2024 to be $0. 1 trillion (4 percent) smaller than the May 2023 projections, and the cumulative deficit from 2024 to 2033 to be $1. 4 trillion (7 percent) smaller. The largest contributor to the 10-year projected deficit reduction is a $2. 3 trillion reduction in discretionary spending projections resulting from the combination of the Fiscal Responsibility Act and the Supplemental Continuing Appropriations and Other Extensions Act of 2024.

The deficit and spending are adjusted to remove the effects of shifts in the timing of certain payments when a fiscal year begins on a weekend. Excluding these adjustments, the 2024 deficit is $1. 5 trillion (5. 3 percent of GDP).

The Economic Outlook in Six Figures

Growth of Real GDP

See Chapter 1. When October 1 (the start of a fiscal year) falls on a weekend, payments that would normally be made on that date are made at the end of September and therefore slip into the prior fiscal year. Spending and the budget deficit are adjusted to remove the effects of these timing shifts.

Consumer Spending on Goods and Services

Federal spending as a percentage of GDP is projected by CBO to exceed the 50-year average every year from 2024 through 2034. Revenues will fall below the 50-year average in 2025, but will be only slightly above the 50-year average thereafter.

Outlook for 2024–2034

As a percentage of GDP

Expenditures will reach $10. 0 trillion, or 24. 1% of GDP, in 2034, due to rising mandatory spending and rising net interest costs.

Unemployment

Revenues will be $7. 5 trillion, or 17. 9% of GDP, in 2034.

The Labor Force

CBO projects that rising spending on Social Security and Medicare will boost mandatory spending. Discretionary spending as a share of GDP will fall to historic lows. Also, rising debt and rising interest rates will increase net interest spending. Beginning next year, net interest costs will be a larger percentage of GDP than they have been at any time since at least 1940, the first year the Office of Management and Budget reported such data.

As a percentage of GDP

The personal income tax as a percentage of GDP fell sharply in 2023 from historically high levels in 2022. The decline in revenues was due in part to low capital gains from asset sales and the Internal Revenue Service's partial extension of tax payment deadlines. Revenues will rise in 2024 as these payment delays are resolved. Revenues will rise again in 2026 and 2027 as some provisions of the 2017 tax law are scheduled to expire.

Outlook for 2024–2034

As a percentage of GDP

CBO projects a budget deficit (the amount by which expenditures exceed revenues) in 2034 equal to 6. 1 percent of GDP. Net interest payments will increase relative to GDP, reaching 3. 9 percent of GDP in 2034. The primary balance deficit (excluding net interest payments) will increase in 2025, decrease for several years thereafter, and then increase again.

Overall Inflation and Core Inflation

As a percentage of GDP

Interest Rates

The 2024-2033 deficit is projected to be $18. 9 trillion, $1. 4 trillion less than CBO projected in May 2023. The largest contributor to the deficit reduction is the reduction in discretionary spending resulting from the Fiscal Responsibility Act and the Supplemental Continuing Appropriations and Other Extensions Act of 2024. These reductions are partially offset by technical changes that reduce revenues and increase spending on Medicare, Social Security, and clean vehicle and energy tax credits.

Chapter 1: The Budget Outlook

Overview

Trillion

CBO projects that the national federal debt will grow each year, ballooning to a record high of 116% of GDP in 2034. Over the next two decades, the deficit will grow, causing the debt to soar to 172% of GDP in 2054.
As a percentage of GDP

Table 1-1.

CBO’s Baseline Budget Projections, by Category

Real GDP growth is 1. Inflation continues to fall, and the federal funds rate declines.

After 2024, real GDP grows at a moderate pace.

The U. S. economy grew faster in calendar year 2023 than in 2022, even as inflation slowed. Economic growth is projected to slow in 2024 as unemployment rises and inflation falls. CBO expects the Federal Reserve to respond by lowering interest rates starting in midyear. CBO projects economic growth to recover in 2025 and then moderate thereafter. The immigration surge that began in 2022 will continue through 2026, expanding the labor force and increasing economic production.

Interest rates rose in 2023 because the federal funds rate (the rate at which financial institutions make overnight loans to each other) rose to its highest level since 2001. CBO projects this rate to begin to fall in the second quarter of 2024. Interest rates on 10-year Treasury notes rise in 2024 and then fall through 2026.

Inflation slows significantly in 2023. CBO projects inflation, as measured by the personal consumption expenditures price index (PCE), to slow further in 2024, to roughly the Federal Reserve's 2% long-run goal, then to rise in 2025 and then fall slightly.

Deficits

Since February 2023, when CBO released its last economic projections, CBO has lowered its forecasts for economic growth and inflation (as measured by the PCE price index) for 2024. CBO also expects interest rates to be higher from 2024 through 2027 than it projected last year. From 2027 onward, CBO's current and previous economic projections are broadly similar.

Table 1-2.

CBO’s Baseline Projections of Outlays and Deficits, Adjusted to Exclude Effects of Timing Shifts

See Table 2-1. Domestic corporate profits are estimated for 2023.

Real GDP growth averages 2. 2% per year from 2025 through 2028.

Personal consumption, which shifted sharply toward goods and away from services during the pandemic, returns to pre-pandemic patterns.

Growth in economic output, as measured by gross domestic product (GDP), is projected to slow in 2024 due to sluggish personal consumption and declining business investment in nonresidential structures. Real (inflation-adjusted) GDP growth is projected to increase in 2025 after the Federal Reserve responds to worsening economic conditions in 2024 by cutting interest rates.

CBO expects that consumer spending will continue to shift from goods to services, with people gradually returning to pre-pandemic consumption patterns. CBO projects that by 2030, the share of goods in consumer spending will return to the gradually declining trend seen before the pandemic.

The unemployment rate will rise to 4. 4% by the end of 2024 and then plateau.

The labor force will expand slowly over the next few years.

CBO projects that the unemployment rate will rise to 4. 4% by the fourth quarter of 2024, reflecting slower economic growth. After that, the unemployment rate will range from 4. 3% to 4. 5%. Fluctuations in the unemployment rate are primarily driven by changes in economic growth and the size and composition of the labor force.

Figure 1-1.

Total Deficit, Net Interest Outlays, and Primary Deficit

99 of the debt GDP held by the people

Million millions

See the diagram of box 2-1.

Inflation will decline further in the next few years and will decrease to 2. 0%or less after 2026.

Interest rates will decrease in the next few years, and thereafter.

Real GDP growth averages 2. 2% per year from 2025 through 2028.

In the second quarter of 2024, the CBO expects the Federal Reserve Council (Fed) to reduce Federal Fund interest rates that affect economic interest rates, as the Federal Preparatory System (Fed) responds to the increase in inflation and the rise in unemployment. From this year, the difference between Federal Fund interest rates and 1 0-year government bond interest rates is expected to gradually return to the lon g-term average. Current predictions on CBO will continue to expand the number of employees or job seekers at a gentle pace until 2026. Until 2026, the population growth is mainly due to the increase in immigrants, which is more than a decrease in labor demand and a decrease in labor population due to an increase in the average age. Most of the recent and future immigrants are adults who are 25 to 54 years old.

Million millions

See the diagram of box 2-1.

Debt

Inflation will decline further in the next few years and will decrease to 2. 0%or less after 2026.

Debt Held by the Public

Interest rates will decrease in the next few years, and thereafter.

Table 1-3.

CBO’s Baseline Projections of Federal Debt

According to CBO predictions, the rise rate of the entire price in 2024 and 2025 (measured with the PCE price index) is lower than last year. One of the main reasons that inflation is expected to be lower than in recent years is to alleviate the price increase pressure on food, energy, and other products. Another reason is that the rise in interest rates in 2024 has weakened the growth of shelter service prices (reflecting the cost of both rental and home housing).

See Table 2-1. Domestic corporate profits are estimated for 2023.

Real GDP growth averages 2. 2% per year from 2025 through 2028.

See the diagram of box 2-1.

Inflation will decline further in the next few years and will decrease to 2. 0%or less after 2026.

Interest rates will decrease in the next few years, and thereafter.

Figure 1-2.

Federal Debt Held by the Public

99 of the debt GDP held by the people

The Congressional Budget Office's baseline budget projections project the federal budget deficit to be $1. 5 trillion this year, rising generally over the next decade to $2. 6 trillion in 2034. (Adjusting to exclude the effects of shifts in certain payment timing when the first day of the fiscal year falls on a weekend, the deficit this year is $1. 6 trillion.) The cumulative deficit for 2025-2034 is projected to be $20. 0 trillion. These projections, finalized on January 3, 2024, incorporate the effects of legislation enacted at that time and therefore do not include the effects of subsequent legislation, including the "Further Supplemental Continuing Appropriations and Other Extensions Act of 2024" (Public Law 118-35), enacted on January 19, 2024. 1 Incorporating the budget effects of subsequent legislation enacted to date would not materially change the projections presented here. Relative to the size of the economy, the 2024 budget deficit will be 5. 3% of gross domestic product (GDP). CBO projects that annual deficits will generally increase from 2025 through 2034, averaging 5. 7% of GDP per year, well above the average deficit over the past 50 years.

See the diagram of box 2-1.

Real GDP growth averages 2. 2% per year from 2025 through 2028.

The budget deficits in CBO’s current projections are generally smaller than the baseline projections for 2024–2033 released in May 2023. The budget shortfall in 2024 is projected to be $63 billion, and the cumulative deficit for 2024–2033 is projected to be $1. 4 trillion, less than projected in May of last year. These net reductions are due to the Fiscal Responsibility Act (FRA, P. L. 118-5) and the Supplemental Continuing Appropriations and Other Extensions Act of 2024 (P. L. 118-22), as well as updates and other changes to CBO’s economic projections (see Chapter 3).

Beyond 2034, CBO’s projections show that the deficit will continue to increase relative to the size of the economy. The primary reasons for the increase in expenditures are rising interest costs and increased spending on major health programs. Revenues also increase throughout the period, but more slowly than expenditures. Continuing such large deficits would result in further increases in the federal debt held by the public, which has not recently reached post-World War II levels.

Other Measures of Debt

CBO prepares its base budget projections in accordance with the provisions of the Balanced Budget and Emergency Deficit Control Act of 1985 (Deficit Control Act, P. L. 99-177) and the Congressional Budget and Confiscation Control Act of 1974 (P. L. 93-344). These statutes require CBO to construct its baselines under the assumption that current law governing revenues and expenditures will generally remain unchanged. For discretionary funds, CBO's baselines incorporate limitations on such funds for 2024 and 2025, as set forth in the FRA, and (as required by law) reflect the assumption that funds will grow with inflation after those limitations expire. Discretionary funds that are not subject to limitations are generally assumed to grow with inflation throughout the next decade.

CBO's baseline budget projections are intended to provide a benchmark for policymakers to evaluate the potential effects of policy changes because future legislative actions could produce significantly different outcomes. Even if federal law remained unchanged over the next decade, actual budget outcomes would likely differ from CBO's baseline projections because of unforeseen economic conditions as well as many other factors that affect federal revenues and spending, such as executive actions.
The $ 1, 500 billion fiscal deficit of $ 1, 500 billion in 2024 was lower than last year's shortage. If both 2024 and 2023 had no specific payment time, the deficit would have grown and the decrease in decrease. Since October 1, 2023 (the first day of the 2024 fiscal year) was on the weekend, payments that would normally be performed on that day were paid in the 2023 fiscal year. Similarly, since October 1, 2022 was on the weekend, payments to be paid on that day (from the 2023 fiscal year) shifted in the 2022 fiscal year. Without such a shift, this year's deficit forecasts will be $ 1. 600 billion and will be $ 102 billion less than $ 1. 7 trillion in 2023 (see Table 1-2). In the remaining part of the two chapters, spending and deficit (both predictive and past amounts) reflect the adjustments to exclude the effects of the time off. This allows you to clearly analyze the basic annual trends of these budget categories.
Data source data source: US Council Budget Bureau, Ministry of Finance. See www. cbo. gov/publication/59710#data.
GDP = Gross domestic product.

Outlays

a. If October 1 (the first day of the fiscal year) is on the weekend, a specific payment that would normally be performed on that day will be performed at the end of September, so it will shift in the previous year. These shifts mainly affect obligatory expenditures and are affected by discretionary spending, but much smaller. Net pable expenditure is not affected.

Outlays in 2024

b. If the expenditure exceeds the income, the result is in the red. Since the value of this line is calculated by deducting the expenditure from the income, the negative value indicates a deficit.

c. c. The primary deficit excludes ne t-free expenditures. The $ 1, 500 billion of the federal deficit in 2024 was less than the shortage of last year. If both 2024 and 2023 had no specific payment time, the deficit would have grown and the decrease in decrease. Since October 1, 2023 (the first day of the 2024 fiscal year) was on the weekend, payments that would normally be performed on that day were paid in the 2023 fiscal year. Similarly, since October 1, 2022 was on the weekend, payments to be paid on that day (from the 2023 fiscal year) shifted in the 2022 fiscal year. Without such a shift, this year's deficit forecasts will be $ 1. 600 billion and will be $ 102 billion less than $ 1. 7 trillion in 2023 (see Table 1-2). In the remaining part of the two chapters, spending and deficit (both predictive and past amounts) reflect the adjustments to exclude the effects of the time off. This allows you to clearly analyze the basic annual trends of these budget categories.

Data source data source: US Council Budget Bureau, Ministry of Finance. See www. cbo. gov/publication/59710#data.

GDP = Gross domestic product.

Table 1-4.

CBO’s Baseline Projections of Mandatory Outlays, Adjusted to Exclude Effects of Timing Shifts

See the diagram of box 2-1.

c. c. The primary deficit excludes ne t-free expenditures. The $ 1, 500 billion fiscal deficit of $ 1, 500 billion in 2024 was lower than last year's shortage. If both 2024 and 2023 had no specific payment time, the deficit would have grown and the decrease in decrease. Since October 1, 2023 (the first day of the 2024 fiscal year) was on the weekend, payments that would normally be performed on that day were paid in the 2023 fiscal year. Similarly, since October 1, 2022 was on the weekend, payments to be paid on that day (from the 2023 fiscal year) shifted in the 2022 fiscal year. Without such a shift, this year's deficit forecasts will be $ 1. 600 billion and will be $ 102 billion less than $ 1. 7 trillion in 2023 (see Table 1-2). In the remaining part of the two chapters, spending and deficit (both predictive and past amounts) reflect the adjustments to exclude the effects of the time off. This allows you to clearly analyze the basic annual trends of these budget categories.

Data source data source: US Council Budget Bureau, Ministry of Finance. See www. cbo. gov/publication/59710#data.

GDP = Gross domestic product.

b. If the expenditure exceeds the income, the result is in the red. Since the value of this line is calculated by deducting the expenditure from the income, the negative value indicates a deficit.

c. c. The primary deficit excludes ne t-free expenditures.

The 2023 deficit was heavily impacted by measures related to the Administration's plan to cancel the outstanding student loan balances of many borrowers. These measures nearly offset the deficits of the previous two years. In September 2022, in accordance with the budget procedures used to estimate the costs of federal credit programs, the Administration included expenditures of $379 billion to reflect the estimated long-term costs of debt cancellation, increasing the fiscal year 2022 deficit. However, due to a Supreme Court decision in June 2023, the debt cancellation plan was not implemented. As a result, in August 2023, the Administration reduced spending on student loan programs by $333 billion. 3 This measure reduced the fiscal year 2023 deficit.

If the fiscal year 2023 deficit calculation had excluded the Administration's withdrawal of its plan for student loan cancellation, the deficit would have been larger, $2. 0 trillion instead of $1. 7 trillion, and the CBO baseline projected deficit decline from 2023 to 2024 would have been $435 billion instead of $102 billion.

Relative to the size of the economy, the deficit is estimated to shrink to 5. 6% of GDP this year from 6. 2% last year. (Without student loan cancellation, the 2023 deficit would have been 7. 5% of GDP.) The CBO baseline deficit widens to 6. 1% of GDP in 2025, then declines over the next two years, to 5. 2% of GDP in 2027. After 2028, the deficit will increase again, reaching 6. 1% of GDP in 2034, the final year of the projection period (see Figure 1-1). The cumulative deficit for 2025-2034 is projected to be $19. 8 trillion, or 5. 6% of GDP (excluding timing effects).

As a percentage of GDP

CBO projects a total budget deficit (the amount by which expenditures exceed revenues) of 6. 1% of GDP in 2034. Net interest payments will increase relative to GDP, reaching 3. 9% of GDP in 2034. The primary deficit will increase in 2025, decrease for several years thereafter, and then increase again.

Data source Congressional Budget Office. See www. cbo. gov/publication/59710#data.

If October 1 (start date start date) is on the weekend, payments that should be made on the same day will be paid at the end of September, so it will be shifted from the previous year. All predictions shown here have been adjusted to exclude the effects of such a time. The past amount is adjusted back as long as the available data allows.

The deficit or surplus of the basic financial balance excludes pure spending for interest. If the expenditure exceeds the revenue, it will be in the red. In this figure, the deficit and the surplus are calculated by subtracting the revenue from the expenditure. As mentioned in the federal budget or this chapter, if the expenditure is deducted from the revenue, the negative value is in the red, the positive value shows a surplus.
GDP = Gross domestic product.
The deficit predicted by the CBO is large for past standards. In the past 50 years, the average year was 3. 7 % of GDP. According to CBO predictions, all years from 2024 to 2034, the deficit is more than 5. 2 % of GDP. At least since 1930, the deficit has never been so large for more than five years.
The basic budget deficit, or the excluding interest payments, increased from 2. 5%in 2024 to 2. 8%in 2025, then decreased, to 1. 9%in 2027 for CBO predictions. From 2027 to 2034, the basic budget deficit is 2. 0 % of GDP. In the 62 years from 1947 to 2008, the budget deficit exceeded 2. 0 % of GDP. However, in the past 15 years, due to the financial crisis from 2007 to 2009 and the laws enacted to respond to the Coronavirus pandemic that started in early 2020, this level exceeded this level. There is.
Considering that the unemployment rate predicted by the CBO is relatively low, the main deficit in CBO prediction is particularly large. From 2025 to 2034, the average unemployment rate is expected to remain 4. 5 % or less in each year, and the average deficit in CBO's base line forecast is 2. 1 % of GDP. In a historic contrast, the unemployment rate was 4. 5 % or less for nine years from 1974 to 2023, and the average budget deficit was 0. 3 % of GDP. If the weekend is on the weekend, the payment that should be made on the end of September will be shifted from the previous year. All predictions shown here have been adjusted to exclude the effects of such a time. The past amount is adjusted back as long as the available data allows.

The deficit or surplus of the basic financial balance excludes pure spending for interest. If the expenditure exceeds the revenue, it will be in the red. In this figure, the deficit and the surplus are calculated by subtracting the revenue from the expenditure. As mentioned in the federal budget or this chapter, if the expenditure is deducted from the revenue, the negative value is in the red, the positive value shows a surplus.

GDP = Gross domestic product.
The deficit predicted by the CBO is large for past standards. In the past 50 years, the average year was 3. 7 % of GDP. According to CBO predictions, all years from 2024 to 2034, the deficit is more than 5. 2 % of GDP. At least since 1930, the deficit has never been so large for more than five years.
The basic budget deficit, or the excluding interest payments, increased from 2. 5%in 2024 to 2. 8%in 2025, then decreased, to 1. 9%in 2027 for CBO predictions. From 2027 to 2034, the basic budget deficit is 2. 0 % of GDP. In the 62 years from 1947 to 2008, the budget deficit exceeded 2. 0 % of GDP. However, in the past 15 years, due to the financial crisis from 2007 to 2009 and the laws enacted to respond to the Coronavirus pandemic that started in early 2020, this level exceeded this level. There is.
Considering that the unemployment rate predicted by the CBO is relatively low, the main deficit in CBO prediction is particularly large. From 2025 to 2034, the average unemployment rate is expected to remain 4. 5 % or less in each year, and the average deficit in CBO's base line forecast is 2. 1 % of GDP. In a historic contrast, the unemployment rate was 4. 5 % or less for nine years from 1974 to 2023, and the average budget deficit was 0. 3 % of GDP. If October 1 (start date start date) is on the weekend, payments that should be made on the same day will be paid at the end of September, so it will be shifted from the previous year. All predictions shown here have been adjusted to exclude the effects of such a time. The past amount is adjusted back as long as the available data allows.

GDP = Gross domestic product.

The deficit predicted by the CBO is large for past standards. In the past 50 years, the average year was 3. 7 % of GDP. According to CBO predictions, all years from 2024 to 2034, the deficit is more than 5. 2 % of GDP. At least since 1930, the deficit has never been so large for more than five years.

The basic budget deficit, or the excluding interest payments, increased from 2. 5%in 2024 to 2. 8%in 2025, then decreased, to 1. 9%in 2027 for CBO predictions. From 2027 to 2034, the basic budget deficit is 2. 0 % of GDP. In the 62 years from 1947 to 2008, the budget deficit exceeded 2. 0 % of GDP. However, in the past 15 years, due to the financial crisis from 2007 to 2009 and the laws enacted to respond to the Coronavirus pandemic that started in early 2020, this level exceeded this level. There is.

Box 1-1.

How the Fiscal Responsibility Act Affects CBO’s Baseline Projections of Discretionary Funding

Considering that the unemployment rate predicted by the CBO is relatively low, the main deficit in CBO prediction is particularly large. From 2025 to 2034, the average unemployment rate is expected to remain 4. 5 % or less in each year, and the average deficit in CBO's base line forecast is 2. 1 % of GDP. In a historic contrast, the unemployment rate was 4. 5 % or less for nine years from 1974 to 2023, and the average budget deficit was 0. 3 % of GDP.

The deficit predicted on the CBO base line will increase federal debt. Debt can be measured in various ways. The most common indicators are the debt held by the people, and most of them are composed of securities issued by the Ministry of Finance to procure the federal government's activity funding and repay debt that reaches its maturity. 4 Other indicators are used for various purposes, such as more comprehensively grasping the government's financial status.

After considering all federal borrowing needs, the CBO predicts that the debt held by the people will increase from $ 26. 2 trillion at the end of 2023 to $ 48. 3 trillion (see Table 1-3). The ratio of debts to GDP reached 116%at the end of 2034, increased by about 19%from the end of 2023, and is expected to increase by about 2. 5 times the average ratio over the past 50 years (see Figure 1-2).

$ 100 million

Data Source US Council Budget Bureau, Ministry of Finance. See www. cbo. gov/publication/59710#data.

GDP = Gross domestic product.

a. a. 予算合計に含まれない要因で、政府が国民から借入を行う必要性に影響を与えるもの。 These factors include cash flow related to the federal credit program, such as the increase or decrease in the government's cash balance and the student loan. (The subsidy cost of these programs is reflected in the budget deficit).

b. Student loan balance, other credit transactions, cash balance, value of various financial products.

c. The Ministry of Finance Securities held by the Federal Debt, Federal Trust Fund, and other government accounts held by the people.

d. d. The amount of federal debt subject to the total amount regulation specified by the law. The debt is excluded the debt issued by the Federal Finance Bank and reflects other specific adjustments excluded from the Federal General Debt. Currently, the statutory limit on the issuance of the federal debt has been suspended until January 1, 2025. If there is no legislation on debt limit by the end of the suspension period, the amount of borrowing accumulated during the suspension period will be added to the previous $ 31. 4 trillion. The deficit suppression method calls CBO to predict the age, revenue, and deficit regardless of the debt limit. See the Congress Budget Bureau "Federal Debt and Statatal Maximum, February 2023 (February 2023)" www. cbo. gov/publication/58906.

Table 1-5.

Changes in Discretionary Budget Authority From 2023 to 2024

See the diagram of box 2-1.

Data Source US Congress Budget Bureau. See www. cbo. gov/publication/59710#data.

GDP = Gross domestic product.

The pure amount that the Ministry of Finance publishes and borrows every year is determined by the annual budget deficit. However, several other factors affect the need for the government to borrow from the people. These factors are collectively referred to as other funding to the government, including cash balance of the government, such as fluctuations in the government's cash balance, loan for student loans and small and mediu m-sized enterprises. (These cash flow is not reflected in the budget deficit. The budget deficit records only the subsidy costs of the credit program, that is, the estimated pure cost of the loan of the program and the loan guarantee). 5. The CBO predicts that in 2024, the increase in debt held by the people will be higher than $ 150 billion in 2024. From 2025 to 2034, the increase in federal debt is expected to exceed the cumulative deficit of $ 387 billion.

Most of the additional borrowing arise from the need for financing for the federal loan program. For example, in the case of direct loans, the funds lent to the borrower are deducted from the repayment of the principal, the interest rate, and the payment of other fees. The Ministry of Finance needs to borrow funds every year to fill the difference.

When discussing federal debt, four other scales may be used.

The deducted financial assets from the debt held by the people, excluding the value of the government's financial assets. This index reflects the overall financial status of the government by considering the value of financial assets, such as student loans, which the government bears the debt. According to the CBO base line prediction, this indicator fluctuates with the debt held by the people in general, but is 6 % to 8 % smaller. CBO predicts that the federal debt of the people is increasing year by year, and in 2034 it has risen to a highest level of 116 % of GDP. In the next 20 years, it is expected that the federal debt will increase to 172 % of GDP in 2054 due to the expansion of the deficit.

Box 1-2.

Why CBO’s Baseline Projections of Discretionary Funding for 2024 Differ From Amounts in Its Cost Estimate for the Continuing Resolution

Data Source US Congress Budget Bureau. See www. cbo. gov/publication/59710#data.

Major Reasons for the Difference

GDP = Gross domestic product.

The pure amount that the Ministry of Finance publishes and borrows every year is determined by the annual budget deficit. However, several other factors affect the need for the government to borrow from the people. These factors are collectively referred to as other funding to the government, including cash balance of the government, such as fluctuations in the government's cash balance, loan for student loans and small and mediu m-sized enterprises. (These cash flow is not reflected in the budget deficit. The budget deficit records only the subsidy costs of the credit program, that is, the estimated pure cost of the loan of the program and the loan guarantee). 5 As a result of such additional borrowing, the CBO predicts that in 2024, the increase in debts held by the people will be higher than $ 150 billion in budget deficit. From 2025 to 2034, the increase in federal debt is expected to exceed the cumulative deficit of $ 387 billion.

Other Reasons

When discussing federal debt, four other scales may be used.

The deducted financial assets from the debt held by the people, excluding the value of the government's financial assets. This index reflects the overall financial status of the government by considering the value of financial assets, such as student loans, which the government bears the debt. According to the CBO base line prediction, this indicator fluctuates with the debt held by the people in general, but is 6 % to 8 % smaller. According to the CBO prediction, the federal debt of the people is increasing year by year, and in 2034, it has grown to the highest level of 116 % of GDP. In the next 20 years, it is expected that the federal debt will increase to 172 % of GDP in 2054 due to the expansion of the deficit.

Data Source US Congress Budget Bureau. See www. cbo. gov/publication/59710#data.

GDP = Gross domestic product.

When discussing federal debt, four other scales may be used.

The debt held by the people, the financial assets and the debt held by the Federal Reserve, excluding the value of the Federal Government and the Federal Reserve Board of the Federal Reserve. be. This index represents the net debt held by no n-governments and further reflects the overall impact on the government's credit market. According to the CBO base line prediction, this indicator increases from $ 19. 1 trillion (71 % of GDP) at the end of 2023 to $ 36. 3 trillion (87 % of GDP) at the end of 2034. (The Federal Preparatory System Board (Fed) Finance Securities (Fed) was $ 5. 0 trillion at the end of 2023, but decreased to $ 4. 4 trillion at the end of 2024.

The debt is composed of debt held by the people and the Ministry of Finance Securities held by government accounts (eg, the Social Security Trust Fund). The debt held by the government account does not directly affect the economy and does not have a net effect on the budget. It is meaningless as a benchmark of future debt of the Ministry of Finance, because it indicates the cumulative difference between the past collection and expenditure of a certain program. According to the CBO base line prediction, the debt owned by the people will increase $ 22. 1 trillion from the end of 2023 to the end of 2034, but the debt held by the government accounts will decrease by about $ 660 billion, reflecting the decline in many trust funds. 。 As a result, the Federal General debt will increase $ 21. 4 trillion in this period, and will be $ 54. 4 trillion at the end of 2034. About 11 % of them are debt held by government accounting. Deducting the debt held by the people, the financial assets and the debt held by the Federal Reserve, except the value of the Ministry of Finance and the Federal Reserve Council held by the federal government. It is a thing. This index represents the net debt held by no n-governments and further reflects the overall impact on the government's credit market. According to the CBO base line prediction, this indicator increases from $ 19. 1 trillion (71 % of GDP) at the end of 2023 to $ 36. 3 trillion (87 % of GDP) at the end of 2034. (The Federal Preparatory System Board (Fed) Finance Securities (Fed) was $ 5. 0 trillion at the end of 2023, but decreased to $ 4. 4 trillion at the end of 2024.

Outlays From 2025 to 2034

The debt is composed of debt held by the people and the Ministry of Finance Securities held by government accounts (eg, the Social Security Trust Fund). The debt held by the government account does not directly affect the economy and does not have a net effect on the budget. It is meaningless as a benchmark of future debt of the Ministry of Finance, because it indicates the cumulative difference between the past collection and expenditure of a certain program. According to the CBO base line prediction, the debt owned by the people will increase $ 22. 1 trillion from the end of 2023 to the end of 2034, but the debt held by the government accounts will decrease by about $ 660 billion, reflecting the decline in many trust funds. 。 As a result, the Federal General debt will increase $ 21. 4 trillion in this period, and will be $ 54. 4 trillion at the end of 2034. About 11 % of them are debt held by government accounting. The debt held by the people, the financial assets and the debt held by the Federal Reserve, excluding the value of the Federal Government and the Federal Reserve Board of the Federal Reserve. be. This index represents the net debt held by no n-governments and further reflects the overall impact on the government's credit market. According to the CBO base line prediction, this indicator increases from $ 19. 1 trillion (71 % of GDP) at the end of 2023 to $ 36. 3 trillion (87 % of GDP) at the end of 2034. (The Federal Preparatory System Board (Fed) Finance Securities (Fed) was $ 5. 0 trillion at the end of 2023, but decreased to $ 4. 4 trillion at the end of 2024.

Figure 1-3.

Total Federal Outlays and Revenues

99 of the debt GDP held by the people

Debt subject to limits refers to debt that is subject to the federal government's borrowing limits, often referred to as the debt ceiling. Such debt differs from gross federal debt in that it primarily excludes debt issued by federal financial banks and includes certain other adjustments that are excluded from gross debt. 6 Currently, the statutory limit on new issuance of federal debt is suspended until January 1, 2025. In the absence of legislative action to adjust the debt ceiling before the end of the suspension, borrowings accumulated during the suspension will be added to the previous debt ceiling of $31. 4 trillion. The Deficit Control Act requires CBO to project expenditures, revenues, and deficits independent of the debt ceiling. Thus, CBO's baseline projections indicate that debt subject to limits will continue to grow over the next decade, reaching $54. 5 trillion in 2034. In CBO's baseline projection, spending would rise from 22. 7 percent of GDP in 2023 to 23. 1 percent of GDP in 2024 and remain near that level through 2028. Spending would then rise as a share of the economy each year, reaching 24. 1 percent of GDP in 2034. Since 1974, spending has averaged 21. 0 percent of GDP.

See the diagram of box 2-1.

Inflation will decline further in the next few years and will decrease to 2. 0%or less after 2026.

Real GDP growth averages 2. 2% per year from 2025 through 2028.

According to CBO predictions, in 2024, the total obligatory expenditure under the current law (after the deduction of the income offset) reached $ 3. 90 trillion, increasing (or 4 %) from 2023 (4 %). See Table 1-4). This is the same rate as last year, but it is much higher than the average GDP from 1974 to 2023. If the total budget effect on the cancellation of the student loan is excluded in the total of 2023, this year's obligatory expenditure will be $ 167 billion less than 2023.

Figure 1-4.

Outlays, by Category

99 of the debt GDP held by the people

Data source data source: US Council Budget Bureau. See www. cbo. gov/publication/59710#data.

See the diagram of box 2-1.

Inflation will decline further in the next few years and will decrease to 2. 0%or less after 2026.

Real GDP growth averages 2. 2% per year from 2025 through 2028.

b. b. Total expenditure excluding the effects of med care insurance premiums and other offset income. (Pure Medicare spending is described in the supplement).

C. C. Affordable Care ACT, purchased through a market established and provided through BASIC HEALTH PROGRAM, and spending to stabilize medical insurance premiums purchased by individuals and small employees. 。

d. Includes American Oopochun's tax deduction and other deductions. Financial deficit suppressing methods require CBO to create baseline forecasts for most existing duty spending, assuming that the current law is generally maintained. Thus, the base line prediction of the CBO obligatory expenditure reflects the change in the economy, the increase in the number of beneficiaries of specific obligatory programs, and the effects of other factors associated with the cost of these programs. This prediction also incorporates some obligatory programs for the ful l-scale reduction of budget resources required by the current law.

According to CBO predictions, in 2024, the total obligatory expenditure under the current law (after the deduction of the income offset) reached $ 3. 90 trillion, increasing (or 4 %) from 2023 (4 %). See Table 1-4). This is the same rate as last year, but it is much higher than the average GDP from 1974 to 2023. If the total budget effect on the cancellation of the student loan is excluded in the total of 2023, this year's obligatory expenditure will be $ 167 billion less than 2023.
$ 100 million
Data source data source: US Council Budget Bureau. See www. cbo. gov/publication/59710#data.
The expenditure of the benefit program shown in this table excludes management costs, which are generally discretionary.

MERHCF = Defense General Medical Medicate Legal Medical Fund, N. A. = None,* = 0 to 500 million dollars.

a. If A. November 1st (first day of accounting) is on the weekend, a specific payment that should be paid on that day will be made at the end of September, so it will be shifted from the previous year. Expenditures have been adjusted to eliminate the effects of such a time.

b. b. Total expenditure excluding the effects of med care insurance premiums and other offset income. (Pure Medicare spending is described in the supplement).

Table 1-6.

CBO’s Baseline Projections of Discretionary Spending, Adjusted to Exclude Effects of Timing Shifts

See the diagram of box 2-1.

$ 100 million

Data source data source: US Council Budget Bureau. See www. cbo. gov/publication/59710#data.

The expenditure of the benefit program shown in this table excludes management costs, which are generally discretionary.

MERHCF = Defense General Medical Medicate Legal Medical Fund, N. A. = None,* = 0 to 500 million dollars.

b. b. Total expenditure excluding the effects of med care insurance premiums and other offset income. (Pure Medicare spending is described in the supplement).

d. Includes American Oopochun's tax deduction and other deductions.

e. Poor families (Child Support ENFORCEITMETMENT to States), Child Care Entitlement To Includes ATES) and other programs that benefit children.

f. Includes benefits to retirement programs for civil servants, foreign civil servants, coastal security squads, benefits for smal l-scale retirement programs, and pensioners.

G. Includes retirement compensation, pensions, and life insurance programs.

H. H. Provides medical, claim processing, and other specific accompanying costs related to the care of veterans exposed to harmful substances.

I. Mainly GI Building and similar educational benefits.
J. Payment from Fanny Mei and Freddy Mac to the Ministry of Finance will be recorded as offset in 2023 and 2024. Since 2025, CBO's estimation reflects the guarantee issued by these institutions and the net lifetime expenses of the loan, that is, the subsidy costs adjusted by market risk. The CBO counts these expenses as the fiscal year spending of the year.

According to CBO predictions, the spending of these programs decreases most in 2024:

Revenues

Deposit insurance. The Federal Deposit Insurance Corporation (FDIC) is expected to decrease by $ 117 billion this year as the bank collapse in 2023 continues. This year (and the next few years), FDICs have liquidated bank assets and collect high insurance premiums from financial institutions that FDIC has insurance, so that they have spent a lot to solve these bankruptcy. I think it can be collected. The CBO predicts that the bankruptcy of banks in 2024 will decrease from last year.

According to the base line prediction updated by Medicade CBO, Medicade spending will decrease by $ 58 billion (9 %) from 2023 to 2024. Most of this reduction is due to two factors. First, each state continues to r e-evaluate the qualifications of those who have joined Medicade during the emergency of public health by Coronavirus. 8. In 2023, the Continuity of the Continuity (P. L. 117-328) ended the requirements for continuous subscriptions on March 31, 2023, and each state began to review the registrants and cancel the registration of those who lost qualifications. 。 The CBO anticipates that the process of this process will reduce the number of Medicade subscribers in 2024. Furthermore, the law has reduced the reinforcement rate for the federal government's refund from the federal service to the state of the federal government to a average of 5 % points in 2023 to 1. 5 % points in the first quarter of 2024 and then zero. Ta.

Table 1-7.

CBO’s Baseline Projections of Revenues

See the diagram of box 2-1.

Refundable tax deduction. According to the CBO prediction, the expenditure for refundable tax deductions was $ 118 billion in 2024, and $ 26 billion less than the amount recorded in 2023. Coronavirus refund deductions will decrease by $ 31 billion in 2024. 9 Conversely, it is expected that income tax deduction will increase $ 7 billion this year due to an increase in wages and employment.

Supplement Nutritional aid program. Supplement The Nutritional Aid Program (SNAP) is expected to decrease by $ 23 billion (17 %) in 2024, and is expected to be $ 112 billion. This decrease is due to the end of pandemi c-related benefits. Emergency allocation paid to SNAP subscribers at the time of pandemic ended in February 2023, and CBO predicts that the spending of the pandemic electronic benefit transfer program, which has been provided to households with children, will end in 2024. 。 In addition, the CBO predicts that this year's SNAP participants will decrease by about 1 million, to 41. 1 million.

These programs are the most increased in the approximate expenditure in 2024:

Higher education. The CBO base line is expected to increase $ 213 billion this year this year and to increase from $ 183 billion last year to $ 29 billion. In 2023, the loan balance was pure $ 207 billion. This reflects the 333 billion dollar reduction of $ 333 billion by the Supreme Court ruling, which stopped the execution of the administration's plan to cancel the loan balance of many student loan debtors. Approximately on e-third of the $ 333 billion reduction of $ 333 billion has changed the new incom e-supervision repayment plan ($ 74 billion) implemented by the government, and the administration has changed the conditions for loan balance and loan costs. It was offset by an increase in spending ($ 52 billion). Except for the revision of the cost of the loan balance in 2023, expenditures for higher education increased $ 5 billion from 2023 to 2024.
social security. Social security expenditures will increase $ 104 billion (8 %) in 2024, estimated to be $ 1, 500 billion. The average amount of this increase is due to an increase in the average benefits, mostly due to 8. 7 % of living expenses (COLA) in January 2023 and 3. 2 % COLA in January 2024. 。 The remaining growth is the net increase in the total number of recipients. Most of the increase in expenditure s-98 billion is the old-age and survivor insurance part of social security. The rest is the disability insurance part. higher education. The CBO base line is expected to increase $ 213 billion this year this year and to increase from $ 183 billion last year to $ 29 billion. In 2023, the loan balance was pure $ 207 billion. This reflects the 333 billion dollar reduction of $ 333 billion by the Supreme Court ruling, which stopped the execution of the administration's plan to cancel the loan balance of many student loan debtors. Approximately on e-third of the $ 333 billion reduction of $ 333 billion has changed the new incom e-supervision repayment plan ($ 74 billion) implemented by the government, and the administration has changed the conditions for loan balance and loan costs. It was offset by an increase in spending ($ 52 billion). Except for the revision of the cost of the loan balance in 2023, expenditures for higher education increased $ 5 billion from 2023 to 2024.
social security. Social security expenditures will increase $ 104 billion (8 %) in 2024, estimated to be $ 1, 500 billion. The average amount of this increase is due to an increase in the average benefits, mostly due to 8. 7 % of living expenses (COLA) in January 2023 and 3. 2 % COLA in January 2024. 。 The remaining growth is the net increase in the total number of recipients. Most of the increase in expenditure s-98 billion is the old-age and survivor insurance part of social security. The rest is the disability insurance part. Higher education. The CBO base line is expected to increase $ 213 billion this year this year and to increase from $ 183 billion last year to $ 29 billion. In 2023, the loan balance was pure $ 207 billion. This reflects the 333 billion dollar reduction of $ 333 billion by the Supreme Court ruling, which stopped the execution of the administration's plan to cancel the loan balance of many student loan debtors. Approximately on e-third of the $ 333 billion reduction of $ 333 billion has changed the new incom e-supervision repayment plan ($ 74 billion) implemented by the government, and the administration has changed the conditions for loan balance and loan costs. It was offset by an increase in spending ($ 52 billion). Except for the revision of the cost of the loan balance in 2023, expenditures for higher education increased $ 5 billion from 2023 to 2024.
social security. Social security expenditures will increase $ 104 billion (8 %) in 2024, estimated to be $ 1, 500 billion. The average amount of this increase is due to an increase in the average benefits, mostly due to 8. 7 % of living expenses (COLA) in January 2023 and 3. 2 % COLA in January 2024. 。 The remaining growth is the net increase in the total number of recipients. Most of the increase in expenditure s-98 billion is the old-age and survivor insurance part of social security. The rest is the disability insurance part.

Individual Income Taxes

According to Medicare CBO predictions, Medicare expenditures (after deducting offset income) will reach $ 896 billion this year, increasing $ 65 billion (8 %) from 2023. This increase is the result of the increase in benefits, increasing $ 76 billion, and increasing the offset income (mainly due to insurance premiums). Increasing med care benefits will increase mainly to Medicare Advantage Plan (a plan for recipients to be able to receive medical care through a private plan) and part D plan (a plan to cover outpatient prescription drugs). I am concentrated. As the number of subscriptions to med care advantage is increasing, the growth of the conventional medical feed for service program is expected to slow down this year: CBO is CBO in 2024. We expect that the number will increase by 1 million, but this reflects that the number of subscribers in the Medium Care Advantage will increase by 2 million and the number of subscribers to Medicare paid services will decrease by 1 million. 。

Figure 1-5.

Revenues, by Category

99 of the debt GDP held by the people

The sum of other obligatory programs (including subsidies for federal retirement programs and health insurance) is estimated to increase $ 13 billion (0. 3 %) in 2024. Medicare CBO predicts that medicare expenditures (after deducting offset income) will reach $ 896 billion this year, increasing $ 65 billion (8 %) from 2023. This increase is the result of the increase in benefits, increasing $ 76 billion, and increasing the offset income (mainly due to insurance premiums). Increasing med care benefits will increase mainly to Medicare Advantage Plan (a plan for recipients to be able to receive medical care through a private plan) and part D plan (a plan to cover outpatient prescription drugs). I am concentrated. As the number of subscriptions to med care advantage is increasing, the growth of the conventional medical feed for service program is expected to slow down this year: CBO is CBO in 2024. We expect that the number will increase by 1 million, but this reflects that the number of subscribers in the Medium Care Advantage will increase by 2 million and the number of subscribers to Medicare paid services will decrease by 1 million. 。

See the diagram of box 2-1.

Real GDP growth averages 2. 2% per year from 2025 through 2028.

A veteran program. According to CBO, forced spending on veteran programs increased $ 27 billion (16 %) in 2024, to $ 195 billion. Most of this increase is due to an increase in disability compensation received by some veterans. (The average disorder grade of the veterans continues to rise, and as a result, the amount of benefits is increased.) In addition, there is also a continuation of the provisions of the 2022 PACT Law (P. L. 117-168), and the number of veterans who receive new disability compensation is expected to increase this year. In addition, as a result of COLA (8. 7 % and 3. 2 %, respectively), which was enforced in January 2023 and January 2024, expenditures for veterans will increase.

The sum of other obligatory programs (including subsidies for federal retirement programs and health insurance) is estimated to increase $ 13 billion (0. 3 %) in 2024.

Scrupicated spending. This category includes expenditures on the various activities of the federal government. Most of the discretionary expenditures include most of the national defense expenses, primary and secondary education, housing support, international issues, many no n-national spending on no n-defensive activities, and spending on specific transportation programs (however, funding for these programs. It is included. In any year, discretionary spending is from the budget permissions given that year, while others arise from the budget recorded in the previous year. 10

According to CBO prediction, this year's discretion and discretionary expenditures are $ 1. 7 trillion. Compared to last year's budget, this year's budget is expected to increase $ 17 billion. It is mainly due to spending from the budget frame of the previous year that spending increases despite the reduction of budget slots.

The base line prediction of CBO's discretionary spending reflects the law as of January 3, 2024. The continuous resolution (more continuous expenditure and other extension laws in 2024), which was valid at that time, funded for some federal agencies until January 19 and to other federal governments until February 2. Was provided. The CBO base line is calculated as converted to the annual rate of funds provided by this resolution, that is, the funds provided by the continuation resolution were valid throughout the fiscal year. As a result, the budget amount exceeded the maximum budget budget specified by the Financial Liability Law, so the total budget authority and the resulting spending were adjusted to the upper limit (cap). (See Box 1-1 for details on the effects of the FRA on the baseline prediction of CBO's discretionary spending). discretionary spending. This category includes expenditures on the various activities of the federal government. Most of the discretionary expenditures include most of the national defense expenses, primary and secondary education, housing support, international issues, many no n-national spending on no n-defensive activities, and spending on specific transportation programs (however, funding for these programs. It is included. In any year, discretionary spending is from the budget permissions given that year, while others arise from the budget recorded in the previous year. 10

The base line prediction of CBO's discretionary spending reflects the law as of January 3, 2024. The continuous resolution (more continuous expenditure and other extension laws in 2024), which was valid at that time, funded for some federal agencies until January 19 and to other federal governments until February 2. Was provided. The CBO base line is calculated as converted to the annual rate of funds provided by this resolution, that is, the funds provided by the continuation resolution were valid throughout the fiscal year. As a result, the budget amount exceeded the maximum budget budget specified by the Financial Liability Law, so the total budget authority and the resulting spending were adjusted to the upper limit (cap). (See Box 1-1 for details on the effects of the FRA on the baseline prediction of CBO's discretionary spending). Scrupicated spending. This category includes expenditures on the various activities of the federal government. Most of the discretionary expenditures include most of the national defense expenses, primary and secondary education, housing support, international issues, many no n-national spending on no n-defensive activities, and spending on specific transportation programs (however, funding for these programs. It is included. In any year, discretionary spending is from the budget permissions given that year, while others arise from the budget recorded in the previous year. 10

Two different sections of the Fiscal Responsibility Act of 2023 (FRA, Public Law 118-5) established different limits (also called caps) for both defense and non-defense discretionary funds for 2024 and 2025. Which provisions of this Act apply depends on the timing of the budget passage and the budget period. 1 The limits set out in Section 101 of the FRA apply at the beginning of each fiscal year. However, if a continuing resolution was still in effect on January 1 of the same fiscal year, these limits are replaced by the limits set out in Section 102 of the FRA. (If a full-year budget is passed after January 1, the limits revert to the limits under Section 101 of the Act.)

Payroll Taxes

Defense and non-defense budget limits most, but not all, discretionary spending. Some funds designated for specific purposes have adjustable limits, and other specific funds are not affected by the limits at all. Because amounts appropriated for these purposes are generally not subject to caps, the Congressional Budget Office projects such funds as provided by the Balanced Budget and Emergency Deficit Control Act of 1985, that is, assuming that future appropriations will be equal to current year appropriations and increased for inflation. (Funding for certain types of activities that would result in cap adjustments are subject to separate caps.)

Corporate Income Taxes

CBO's baseline includes downward revisions to discretionary budgets to reflect the impact of the caps. For 2024, because the continuing resolution took effect on January 1, the baseline reflects the caps under Section 102 of the FRA, resulting in $850 billion for defense and $736 billion for nondefense spending. These amounts are $10 billion and $41 billion, respectively, below the amounts CBO estimated in its continuing resolution cost estimates, which are the basis for this report's projections. 2 Because budget cost estimates, not baselines, are used to implement cap regulations, CBO's baseline reflects a downward revision of these amounts for 2024 (see table). (The difference between funding projected in the baseline and funding reported in the continuing resolution cost estimate causes the baseline base funding total, i. e., funding constrained by the cap, to exceed the cap.) 3 Two different sections of the Fiscal Responsibility Act of 2023 (FRA, Public Law 118-5) established different limits (also called caps) for both defense discretionary and nondefense discretionary funding for 2024 and 2025. Which provisions of this Act apply depends on the timing of the budget enactment and the budget period. 1 The cap amounts established in Section 101 of the FRA apply at the beginning of each fiscal year. However, if a continuing resolution was still in effect on January 1 of the same fiscal year, these limits are replaced by the caps established in Section 102 of the FRA. (If a full-year budget is enacted after January 1, the caps revert to those under Section 101 of the Act.)

Defense and nondefense caps limit most, but not all, discretionary spending. Some funds designated for specific purposes adjust the caps, and certain other funds are not affected by the caps at all. Because amounts appropriated for these purposes are generally not subject to caps, the Congressional Budget Office projects such funds as provided for in the Balanced Budget and Emergency Deficit Control Act of 1985, that is, by assuming that future appropriations are equal to current-year amounts disbursed, increased by the rate of inflation. (Funds for certain types of activities that would adjust the caps are subject to separate caps.)

CBO's baseline includes downward adjustments to discretionary spending to reflect the impact of the caps. For 2024, because the continuing resolution took effect on January 1, the baseline reflects the caps under Section 102 of the FRA, resulting in $850 billion for defense and $736 billion for nondefense. These amounts are $10 billion and $41 billion, respectively, below what CBO estimated in its continuing resolution cost estimates, which are the basis for this report's projections. 2 Because budget proposal cost estimates, not the baseline, are used to implement the caps, CBO's baseline reflects a downward revision of these amounts for 2024 (see table). (The difference between funding projected in the baseline and funding reported in the continuing resolution cost estimates causes the baseline's base funding totals, i. e., funding constrained by the caps, to exceed the caps.) 3Two different sections of the Fiscal Responsibility Act of 2023 (FRA, Public Law 118-5) established different limits (also called caps) for both defense and non-defense discretionary funds for 2024 and 2025. Which provisions of this Act apply depends on the timing of the budget passage and the budget period. 1 The limits set out in Section 101 of the FRA apply at the beginning of each fiscal year. However, if a continuing resolution was still in effect on January 1 of the same fiscal year, these limits are replaced by the limits set out in Section 102 of the FRA. (If a full-year budget is passed after January 1, the limits revert to those under Section 101 of the Act.)

For 2025, CBO's baseline reflects the caps established by Section 101 of the FRA, which are $895 billion for defense funding (an increase from the caps in effect as of 2024) and $711 billion for nondefense funding (a decrease from the caps in effect as of 2024). Because the 2025 defense base budget is below the caps, no additional adjustments are needed to the 2025 defense base budget projections. Therefore, the defense base budget beyond 2025 is projected by frontloading the 2024 defense base budget and adjusting for inflation. Thus, the defense base budget for the next few years will be $10 billion to $11 billion less than would be projected without the caps. CBO projects that base funding for nondefense activities will exceed the Section 101 cap by $100 billion in 2025, so CBO included a reduction in such funding in the baseline to bring such funding into compliance with the 2025 cap. Thus, the base funding projection in the baseline matches the 2025 cap—$711 billion—and the baseline includes the assumption that nondefense base funding will equal that amount (including inflationary increases) in each year from 2026 through 2034. Without the cap, nondefense base funding would exceed CBO's baseline projection by more than $100 billion each year after 2025. 1. For more information, see Congressional Budget Office, Letter to the Honorable Jody Arrington and the Honorable Brendan Boyle on Implementation of Statutory Limits on Discretionary Funding for FY 2024 (January 4, 2024), www. cbo. gov/publication/59861.

2. Congressional Budget Office, cost estimate for H. R. 6363, the Further Continuing Appropriations and Other Extensions Act, 2024 (November 13, 2023), www. cbo. gov/publication/59755.

Receipts From Other Sources

3. See Box 1-2 for the difference between CBO’s cost estimate for the continuing resolution and CBO’s baseline total funding.

Table 1-8.

CBO’s Baseline Projections of Smaller Sources of Revenues

See the diagram of box 2-1.

Billion Dollars

Data Sources Data source: Congressional Budget Office. See www. cbo. gov/publication/59710#data.

This table does not include debt limits for specific transportation programs.

FRA = Fiscal Responsibility Act, * = between zero and $500 million.

a. Shows the funding amounts for each category if the FRA were in place in 2023. Some discretionary funds in CBO's baseline are not subject to the caps established by the FRA. Current law allows for adjustments to the caps for certain funds designated for emergency requirements, disaster relief efforts, some efforts to reduce overpayments in benefit programs, and wildfire suppression funds. Other funds are completely exempt from the caps. Specifically, certain funds provided pursuant to the 21st Century Cures Act (P. L. 114-255), funds derived from the Port Maintenance Trust Fund, and emergency funds covered by section 103 of the FRA do not count toward the cap. 11 Funds that do not fall into these categories (and are therefore subject to the caps) are referred to as "base" funds.

CBO's baseline projection provides discretionary budget authority for 2024 that is $122 billion (or 7%) less than the 2023 amount (see Table 1-5). (The budget authority does not include mandatory limits governing discretionary spending for certain transportation programs for which spending authority is mandatory; these limits remain the same as last year under this year's continuing resolution.) 12 The base budget amount for 2024 in CBO's baseline is $1. 6 trillion, which generally reflects the limits set forth in section 102 of the FRA. 13 (The base funding total for 2024 in CBO's baseline differs by $37 billion from the funding reported in CBO's continuing resolution cost estimates; see Box 1-2 for an explanation.) Budget authority not subject to caps totals $127 billion this year; more than half of that was provided by the Infrastructure Investment and Jobs Act of 2022 (P. L. 117-58) and the Bipartisan Safe Neighborhoods Act (P. L. 117-159).

Billion Dollars

Tax Expenditures

Data Source Data Source: Congressional Budget Office. See www. cbo. gov/publication/59710#data.

This table does not include debt limits for specific transportation programs.

FRA = Fiscal Responsibility Act; * = between zero and $500 million.

Figure 1-6.

Estimated Outlays, Revenues, and Tax Expenditures in 2024

99 of the debt GDP held by the people

Some discretionary funds in CBO's baseline are not subject to the caps established by the FRA. Current law allows for adjustments to the caps for certain funds designated for emergency requirements, disaster relief efforts, some efforts to reduce overpayments in benefit programs, and wildfire suppression funds. Other funds are completely exempt from the caps. Specifically, certain funds provided pursuant to the 21st Century Cures Act (P. L. 114-255), funds derived from the Harbor Maintenance Trust Fund, and emergency funds covered by Section 103 of the FRA do not count toward the cap. 11 Funds that do not fall into these categories (and are therefore subject to the caps) are referred to as "base" funds.

CBO’s baseline projections provide discretionary budget authority for 2024 of $122 billion (or 7 percent) less than the 2023 amount (see Table 1-5). (The budget authority does not include mandatory limitations governing discretionary spending for certain transportation programs for which spending authority is mandatory; these limitations remain the same as last year under this year’s continuing resolution). 12 The base budget amount for 2024 in CBO’s baseline is $1. 6 trillion, which generally reflects the limitations set forth in section 102 of the FRA. 13 (The base funding total for 2024 in CBO’s baseline differs by $37 billion from the funding reported in CBO’s continuing resolution cost estimates; see Box 1-2 for an explanation). Budget authority not subject to caps totals $127 billion this year. More than half of that was provided by the Infrastructure Investment and Jobs Act of 2022 (P. L. 117-58) and the Bipartisan Safe Neighborhoods Act (P. L. 117-159).

Real GDP growth averages 2. 2% per year from 2025 through 2028.

Data Source Data source: Congressional Budget Office. See www. cbo. gov/publication/59710#data.

This table does not include debt limits for specific transportation programs.

FRA = Fiscal Responsibility Act, * = between zero and $500 million.

a. Shows funding amounts for each category if the FRA were in place in 2023.

b. b. What is specified as an emergency requirement, or a disaster assistance, specific program integrity activities (identifying and reducing overpayments in some benefit programs), specific fire suppression activities, specific funds derived from the port maintenance trust fund It consists of all discretion payments, except for the program specified by the 21st century curing method. The funds of this category are subject to the upper limit set by FRA's 101 and 102, but has not entered in 2023.

The Long-Term Outlook for the Budget

C. C. Almost full is Infrastructure Investment and Jobs Act, and the Bipartisan Safer Communities Act, and the 2023 consecutive year. d AppRopriations Act, 2023) G It is composed of funds specified as an emergency requirement by section 443. Article 103 of the FRA stipulates that such funds are not counted.

Table 1-9.

Key Projections in CBO’s Baseline, Adjusted to Exclude Effects of Timing Shifts, Through 2054

99 of the debt GDP held by the people

See the diagram of box 2-1.

The biggest factor in the difference between the cost estimate of the CBO in the base line and the continuation resolution is due to the 2023 Finance Law (Public Law 118-5). When the amount provided by the continuous resolution is converted to the annual rate, that is, calculated as the law that was valid until 2024, the funds provided in 2024 exceed these restrictions. Therefore, the CBO reflected the prospects for the administration to introduce a statutory mechanism for implementing the upper limit, and adjusted the total funds. These adjustments have reduced the discretionary funds indicated by the bass line for the total funds indicated by the cost estimate of the continuation resolution. 2 b. B. Disaster assistance, or disaster assistance, specific program integration activities (specific program integration activities (identification and reduction in some benefits), specific fire suppression activities, derived from the port maintenance trust fund It consists of all discretion payments, except for specific funds and programs specified by the 21st century curing method. The funds of this category are subject to the upper limit set by FRA's 101 and 102, but has not entered in 2023.

Real GDP growth averages 2. 2% per year from 2025 through 2028.

The discretionary funds up to 2024 at the Congress Budget Bureau are $ 35 billion than the cost estimation of the CBO Continuing Budget Extension (Public Law 118-22) (here is called continuation resolution). 1 This difference has occurred for several reasons (see Table).

The biggest factor in the difference between the cost estimate of the CBO in the base line and the continuation resolution is due to the 2023 Finance Law (Public Law 118-5). When the amount provided by the continuous resolution is converted to the annual rate, that is, calculated as the law that was valid until 2024, the funds provided in 2024 exceed these restrictions. Therefore, the CBO reflected the prospects for the administration to introduce a statutory mechanism for implementing the upper limit, and adjusted the total funds. These adjustments have reduced the discretionary funds indicated by the bass line for the total funds indicated by the cost estimate of the continuation resolution. 2b. B. B. B. 、たたた、、、、、、、、、、、 It consists of all discretion payments, excluding specific funds and programs specified by the 21st century curing method. The funds of this category are subject to the upper limit set by FRA's 101 and 102, but has not entered in 2023.

d. d. It is composed of funds specified as an emergency requirement based on Article 251 of the Deficit Regulation Law, and changes the upper limit level.

Another reason for the difference is due to mandatory program changes enacted in the budget bill known as CHIMP. Under the rules governing how CBO prepares its cost estimates (known as scorekeeping guidelines), such changes made in the budget bill are classified as reductions or increases in discretionary spending in the cost estimates. However, when CBO prepares its baseline estimates, CHIMP is reflected as a reduction or increase in mandatory spending, according to the scorekeeping guidelines governing that classification. 3 On net, CHIMP reduced discretionary spending in CBO's continuing resolution cost estimates by $15 billion. When those reductions are transferred to CBO's mandatory expenditures forecasts, net discretionary funding increases by the same amount.

Box 1-3.

CBO’s Long-Term Budget Projections

Technical and economic updates to the estimated components of discretionary funding also account for part of the difference. For example, some of the fees that agencies collect (such as mortgages guaranteed by the Federal Housing Administration and aviation security fees collected by the Transportation Security Administration) are estimated and classified as offsets to discretionary budget authority. CBO’s estimate for the continuing resolution used the amounts projected in the May 2023 baseline, but CBO’s latest baseline updated its funding estimates and increased its fee estimates. As a result, the baseline’s net discretionary budget authority is $3 billion less than CBO’s estimate for the continuing resolution.

Deficits and Debt

In addition, current law requires CBO to exclude some discretionary funds from its cost estimates. Specifically, Part B of the 21st Century Cures Act (P. L. 114-255) and the CARES Act (P. L. 116-136, as amended) require CBO to exclude from its cost estimates certain funds provided to the National Institutes of Health and the Food and Drug Administration or derived from the Harbor Maintenance Trust Fund. However, this funding is reflected in CBO’s baseline, accounting for another $3 billion of the overall difference.

Finally, when estimating the amount of funds provided by the continuous resolution, a certain amount of money provided to the federal power sales management agency (federal agency that generates power) is completely offset by the commission collected by these institutions. It was instructed by the upper and lower house budget committee to incorporate the assumption of the duration (these fees reduce the total budget authority). (Since the CBO base line does not reflect this assumption, the discretionary budget authority is $ 100 million than the cost estimate.

Spending

1. CONGRESSIONAL BUDGET OFFICE, COST ESTIMATE FOR H. R. 6363, The Further Continuing APPROPRIATIONS and OTHER EXTENSIONS ACT, 2024 (NOVEMBER 13, 2023) o. gov/publication/59755.

2. Details about how the upper limit will affect the discretionary resources in 2024, the famous JODEY on the Congress Budget Bureau, the 2024 fiscal year (January 4, 2024). See the letter to Arrington and the famous BRENDAN BOYLE, www. cbo. gov/Publication/59861. Adjustment of the CBO baseline affects only the discretionary resources ("basic financial resources" in the table), but legal execution procedures will eventually affect most financial resources that are ultimately restricted by the upper limit. do. The total effects of such procedures will be about $ 51 billion.

Revenues

3. ガイドラインの詳細については、Congressional Budget Office, CBO Explains Budgetary Scorekeeping Guidelines (January 2021), www. cbo. gov/publication/56507 を参照のこと。

Changes to CBO’s Long-Term Projections Since June 2023

A total of $ 850 billion in national defense in 2024 is $ 850 billion, reducing $ 42 billion (5 %) from the 2023 budget. Last year, an emergency budget of $ 33 billion was recorded, mainly for military support for Ukraine. As of January 3, 2024, no such funds were provided in 2024. Reduction of basic budgets due to the upper limit of national defense expenses accounts for the remaining difference. In 2024, national defense expenses are expected to be $ 822 billion, which is $ 17 billion (2 %) than 2023.

According to CBO, the total funding to no n-defensive discretion programs decreased by $ 81 billion (8 %) between 2023 and 2024, to $ 876 billion. Of the $ 40 billion, the basic funds of no n-national defense are accounted for. Furthermore, the funds to be specified as an emergency requirement and the upper limit have been reduced by $ 41 billion since last year. Despite the decrease in the 14 budgets, it is expected that the no n-defectation will be expenditure in 2024 to $ 917 billion, the same as 2023.

Net pable expenditure. In the budget, net pair spending is based on government interests for federal debt, and is offset by the government received by the government. Net pable expenditure is occupied by interest paid to the owners of government bonds issued by the Ministry of Finance. The Ministry of Finance also pays the interests of debt issued to the trust fund and other government accounts, but these payments are within government and do not affect the budget deficit.

Pure spending for interest rates has increased by more than 35 % for the past two years, and is expected to increase by 32 % this year. According to CBO, these spending rose to $ 870 billion in 2023 to $ 870 billion in 2024, exceeding the discretion of this year's defense. In comparison with economic scale, ne t-yielding expenditures rose from 2. 4 % in 2023 to 3. 1 % in 2024, doubling from 1. 5 % of GDP in 2021.

The increase in 2024 is expected to rise further, as the average interest rate paid by the Ministry of Finance to government bonds will rise this year, and securities, which are expanding, will be refinanced at a higher interest rate at the time of issuance. 15, for example, the interest rate of 1 0-year government bonds was 3. 0 % in 2022 and 4. 0 % in 2023, but the average CBO's current economic forecast (see Chapter 2) was 4. 6 % in 2024. The debt held by the people (nominal basis, not the ant i-GDP ratio) is scheduled to increase by 6 % from 2023 to 2024, which will also boost this year's net. CBO predicts that the total funding to the no n-defensive discretion program will decrease by $ 81 billion (8 %), from 2023 to 2024, to $ 876 billion. Of the $ 40 billion, the basic funds of no n-national defense are accounted for. Furthermore, the funds to be specified as an emergency requirement and the upper limit have been reduced by $ 41 billion since last year. Despite the decrease in the 14 budgets, it is expected that the no n-defectation will be expenditure in 2024 to $ 917 billion, the same as 2023.

Uncertainty of Budget Projections

The increase in 2024 is expected to rise further, as the average interest rate paid by the Ministry of Finance to government bonds will rise this year, and securities, which are expanding, will be refinanced at a higher interest rate at the time of issuance. 15, for example, the interest rate of 1 0-year government bonds was 3. 0 % in 2022 and 4. 0 % in 2023, but the average CBO's current economic forecast (see Chapter 2) was 4. 6 % in 2024. The debt held by the people (nominal basis, not the ant i-GDP ratio) is scheduled to increase by 6 % from 2023 to 2024, which will also boost this year's net. According to CBO, the total funding to no n-defensive discretion programs decreased by $ 81 billion (8 %) between 2023 and 2024, to $ 876 billion. Of the $ 40 billion, the basic funds of no n-national defense are accounted for. Furthermore, the funds to be specified as an emergency requirement and the upper limit have been reduced by $ 41 billion since last year. Despite the decrease in the 14 budgets, it is expected that the no n-defectation will be expenditure in 2024 to $ 917 billion, the same as 2023.

Figure 1-7.

Uncertainty of CBO’s Baseline Projections of the Budget Deficit

99 of the debt GDP held by the people

According to the CBO base line forecast, the federal expenditure (adjusted to exclude the effects of the timing shift) increased from $ 6. 8 trillion in 2025 to $ 10. 0 trillion in 2034, an average of 4. 5 %. 。 16. In relation to the economic scale, the federal government expenditures gradually rose after about 23 % of GDP for several years, reaching 24. 1 % in 2034 (see Figure 1-3).

See the diagram of box 2-1.

In the ratio of GDP, the expenditure for interest payments will be offset by the decrease in discretionary expenditures, which will be almost the same level in the next few years. From 2024 to 2034, expenditures exceeded the average of 50 years, and income exceeded the past average.

Inflation will decline further in the next few years and will decrease to 2. 0%or less after 2026.

If October 1 (the first day of the fiscal year) is on the weekend, a specific payment that should be made on that day will be made at the end of September, so it will be shifted from the previous year. All predictions shown here have been adjusted to exclude the effects of such a time. The past amount is adjusted back as long as the available data allows.

Real GDP growth averages 2. 2% per year from 2025 through 2028.

Obligation spending. According to CBO predictions, the nominal spending on obligatory programs (after deducting the income offset) will increase an average of 5 % per year from 2025 to 2034. Expenditures for GDP will increase from 13. 9 % in 2025 to 15. 1 % in 2034. At this point, the average over the past 50 years is about 4 points (see Figure 1-4). The two basic trends, an aging population and an increase in federal medical expenses per beneficiaries, have been raising pressure on obligatory spending.

Ratio to GDP

According to CBO predictions, the increase in social security and medical expenditures boosts obligatory expenditures. The ratio of discretionary spending to GDP decreases to a historic low level. In addition, pure spending for interest increases due to the increase in debt and the rise in interest rates. From next year, these expenditures will be larger than in GDP, at least in the first year when the Administrative Budget Budget reported such data.

Data source data source: US Council Budget Bureau. See www. cbo. gov/publication/59710#data.

If October 1 (the start of a fiscal year) falls on a weekend, payments that would normally be made on that date are made at the end of September, and so are shifted to the previous fiscal year. All projections presented here have been adjusted to remove the effects of these timing differences. Historical amounts have been adjusted as far back as available data will allow.

GDP = Gross Domestic Product.

As the population ages, the number of Social Security and Medicare beneficiaries is growing faster than the overall population, and federal costs per beneficiary for major health programs continue to grow faster than GDP per capita. (Federal costs for major health programs continue to grow faster than GDP per capita.) (Expenses for major health programs consist of spending for Medicare, Medicaid, and the Children's Health Insurance Program, plus premium tax credits and related expenses for health insurance purchased through the marketplaces established by the Affordable Care Act. Premium tax credits subsidize the purchase of health insurance.) As a result of these two trends, spending on Social Security and Medicare will increase as a percentage of GDP from 2025 to 2034. Beyond this decade, the impacts on federal spending, especially Medicare, will continue.

Social Security and Major Health Programs. As a percentage of GDP, spending on Social Security and major health programs is projected to increase in each year of the decade, net of offsetting revenues, from 10. 8 percent of GDP in 2025 to 12. 6 percent in 2034. 17

CBO's current baseline includes the following projections for specific programs:

Social Security spending will increase to 5. 3 percent of GDP in 2025 and continue to rise thereafter, reaching 5. 9 percent of GDP in 2034.

Medicare spending will reach 3. 2 percent of GDP in 2025 and rise to 4. 2 percent in 2034.

Federal spending on Medicaid will decline slightly to 1. 9% of GDP in 2025 as pandemic-related spending ends and remain at that level through 2027. Medicaid spending will then increase gradually to 2. 2% of GDP in 2034.

Expenditures for premium tax credits and related expenses for health insurance purchased through marketplaces established under the Affordable Care Act will average 0. 3% of GDP per year through 2034, and spending on the Children's Health Insurance Program will average 0. 1%.

Other duty program. Expenditures on programs other than social security and major medical programs are expected to be 3. 1%of GDP in 2025. Such expenditures include income support programs (unemployment compensation, SNAP, etc.), soldiers and civilian retirement programs, most veterans, and major agricultural programs. This expenditure also includes the offset income collected by the federal government (other than med care).

According to the CBO base line prediction, other obligatory expenditures measured by the GDP ratio decrease to 2. 5 % at the end of the prediction period. (This expenditure, including a large amount of expenditure to respond to pandemic, reached 10. 5%of GDP in 2021). According to CBO's economic prediction, the growth of nominal GDP exceeds inflation. The growth of retirement benefits is an average of 6 % (nominal basis) since 2024, partially offsetting other compulsory expenditures.

Scrupicated spending. In accordance with Article 257 of the Financial Reduction Law, the future discretionary expenditure shall be assumed that the amount paid up to 2024 after inflation adjustment (including funds specified as an emergency requirement). 18 If the predicted amount exceeds the restrictions set by the FRA, the total budget authority on the CBO baseline is adjusted to comply with those restrictions. These adjustments are incorporated into the prediction of CBO's future discretionary budget.

The total discretionary budget expected in 2025 is $ 1. 7 trillion (see Table 1-6). The maximum defense budget is expected to be $ 871 billion, below the current maximum of $ 895 billion. Funds other than national defense expenses, which are restricted, are limited to $ 711 billion, the current maximum amount in 2025. Untimed on the upper limit (most of the money specified as an emergency requirement) is expected to be $ 127 billion in 2025, of which $ 20 million is funded to no n-national programs. In 2025, discretionary spending is expected to be $ 1. 8 trillion, exceeding the total budget for that year.

Billions of dollar

Data source: Congressional Budget Office. See www. cbo. gov/publication/59710#data.

BSCA = Bipartisan Safer Communities Act; FRA = Fiscal Responsibility Act; IIJA = Infrastructure Investment and Jobs Act; n. a. = not applicable; * = $0-500 million.

a. Treasury does not distinguish between base and non-base funded expenditures. Thus, the budget does not include actual amounts attributable to base or non-base funds. The amounts represent how the FRA would have been applied to budget authority or portions of expenditures if it had been in effect in 2023. (Expenditures from funds not subject to the cap are estimated based on data from the Office of Management and Budget.)

b. b. Consists of all discretionary appropriations, except those designated as emergency requirements or for disaster assistance, certain program integrity activities (activities to identify and reduce overpayments in certain benefit programs), certain firefighting activities, certain funds derived from the Port Maintenance Trust Fund, and programs designated in the 21st Century Hardening Act. Funds in this category are subject to the caps established by sections 101 and 102 of the FRA, in effect for 2024 and 2025.

c. Almost entirely made up of funds designated as emergency requirements by IIJA, BSCA, and section 443 of the Consolidated Appropriations Act of 2023. Section 103 of the FRA provides that such funds do not count toward the cap.

d. d. Made up of funds designated as emergency requirements and modifying the cap under section 251 of the Deficit Control Act.

e. e. When October 1 (the first day of the fiscal year) falls on a weekend, certain payments that would normally be paid on that date are made at the end of September and therefore slip into the prior fiscal year. Expenditures are adjusted to remove the effects of these timing differences.

f. Most of the funds provided by IIJA and BSCA were provided only through 2026. After consultation with the Budget Committees, CBO has applied the general baseline treatment for discretionary funds to the funds provided by these bills and therefore projected them to grow with inflation beyond 2026. These amounts show what CBO's baseline spending projections would have been if the funds had not been projected.

After 2025, when the caps expire, CBO projects total discretionary spending to grow by an average of 2. 3 percent per year. Discretionary spending will grow more slowly initially, primarily due to funding cuts in 2024 and 2025. By 2034, discretionary spending will grow at 2. 2 percent, roughly matching the fund growth rate for that year.

As a percentage of GDP, discretionary spending will decline steadily from 5. 9 percent in 2026 to 5. 1 percent in 2034. (Over the past 50 years, discretionary spending has averaged 8. 0% of GDP.

CBO projects defense spending to fall to 2. 5% of GDP in 2034, the smallest percentage of GDP since at least 1962, the earliest year for which the Office of Management and Budget reports such data. Spending on nondefense discretionary programs will be 2. 6% of GDP in 2034, also the smallest since at least 1962. The previous lowest levels of defense and nondefense spending relative to the size of the economy were 2. 9% and 3. 1%, respectively, in the 21st century.

Net interest spending. Over the 10-year projection period, net interest spending will increase at an average annual rate of 6. 2%, from $951 billion in 2025 to $1. 6 trillion in 2034. Relative to the size of the economy, it will increase from 3. 2% in 2025 to By 2034, it will be 3. 9%, 1. 9 percentage points above the 50-year average and higher than any year since at least 1940 (the first year for which the Office of Management and Budget reported such data).

The amount of net interest expense for the federal government is determined primarily by the amount of public debt held and its average interest rate. Growth in net interest expense is affected by changes in the average interest rate on the federal debt and the size of the primary deficit, which requires the government to borrow more and therefore increases the public's debt. This is because rising average interest rates and rising primary deficits interact with each other.

Chapter 2: The Economic Outlook

Overview

According to CBO predictions, the average interest rate of federal debt rises as debt reaches its maturity and refinancing. In 2025, the average interest rate of debts held by the people is expected to increase 0. 1 % from 2024 and 0. 7 % from 2023. This interest rate has been almost stable since then, dropping slightly to 3. 3%from 2027 to 2030, and rises to 3. 5%in the last year of the prediction period. Changes in the average interest rate are due to the interest rate of the Ministry of Finance, the inflation rate applied to the Inflation Protection Securities, and the maturity structure of the issued securities. (See Chapter 2 for the factors of changes in interest rates and inflation).

The primary deficit is 2. 1 % of the GDP on average from 2025 to 2034, and is added to the debt held by the people every year.

According to CBO predictions, the average average interest rate of federal debt accounts for about tw o-thirds of the increase in ne t-payment costs from 2025 to 2034. 20

Gross Domestic Product

The federal income in 2023 was $ 4. 4 trillion. The ratio of GDP was 16. 5 %, far below 19. 4 % recorded in 2022. This decline was mainly due to the collection of individual income tax, which reached an unprecedented level in 2022. The decrease in remittance from the Federal Reserve Council (Fed) is part of the decrease in 2023.

Figure 2-1.

Growth of Real GDP

The CBO expects that the total amount of taxes will temporarily increase to 17. 5%of GDP in 2024 due to the postponed tax collection, and then to 17. 1%of GDP in 2025. (See Table 1-7). It is expected that the tax system will rise to 17. 9 % in 2034 because the tax system is scheduled to be changed and that the Federal Preparatory System Board (Fed) is expected to start a large amount of money to the Ministry of Finance again. I am.

Data source data source: US Council Budget Bureau. See www. cbo. gov/publication/59710#data.

GDP = gross domestic product,*= 0. 05 % of GDP.

A. Income from social security salary tax.

Real GDP growth averages 2. 2% per year from 2025 through 2028.

The primary deficit is 2. 1 % of the GDP on average from 2025 to 2034, and is added to the debt held by the people every year.

According to CBO predictions, the average average interest rate of federal debt accounts for about tw o-thirds of the increase in ne t-payment costs from 2025 to 2034. 20

The Labor Market

Table 2-1.

CBO’s Economic Projections for Calendar Years 2024 to 2034

Data source data source: US Council Budget Bureau. See www. cbo. gov/publication/59710#data.

GDP = gross domestic product,*= 0. 05 % of GDP.

A. Income from social security salary tax.

These overall movements are caused by the following changes in the specific aging source in CBO prediction: According to the CBO prediction, the average interest rate of federal debt rises as debt reaches its maturity and refinanced. do. In 2025, the average interest rate of debts held by the people is expected to increase 0. 1 % from 2024 and 0. 7 % from 2023. This interest rate has been almost stable since then, dropping slightly to 3. 3%from 2027 to 2030, and rises to 3. 5%in the last year of the prediction period. Changes in the average interest rate are due to the interest rate of the Ministry of Finance, the inflation rate applied to the Inflation Protection Securities, and the maturity structure of the issued securities. (See Chapter 2 for the factors of changes in interest rates and inflation).

The primary deficit is 2. 1 % of GDP on average from 2025 to 2034, and is added to the debt held by the people every year.

According to CBO predictions, the average average interest rate of federal debt accounts for about tw o-thirds of the increase in ne t-payment costs from 2025 to 2034. 20

The CBO expects that the total amount of taxes will temporarily increase to 17. 5%of GDP in 2024 due to postpaid taxes, and then to 17. 1%of GDP in 2025. (See Table 1-7). It is expected that the tax system will rise to 17. 9 % in 2034 because the tax system is scheduled to be changed and that the Federal Preparatory System Board (Fed) is expected to start a large amount of money to the Ministry of Finance again. I am.

Data source data source: US Council Budget Bureau. See www. cbo. gov/publication/59710#data.

GDP = gross domestic product,*= 0. 05 % of GDP.

A. Income from social security salary tax.

These overall movements are caused by the following changes of certain old sources in CBO prediction:

Personal income tax receipts as a percentage of GDP last year fell sharply, from 10. 4% in 2022 to 8. 1% in 2023. The decline was driven in part by lower asset appreciation and capital gains realizations, as well as the Internal Revenue Service's (IRS) extension to 2024 of the tax payment deadline for taxpayers living in areas affected by natural disasters. (CBO projects that these tax deferrals will increase receipts as a percentage of GDP to 8. 8 percent in 2024, then decline to 8. 6 percent in 2025, when no further deferrals are expected. Receipts would then increase from 2025 through 2027, as tax reforms, including most rate increases, are expected to increase receipts as a percentage of taxable personal income. Effective bracket creep (discussed below) will also contribute to increasing receipts over time. This is because collections from corporations in areas affected by natural disasters are deferred, and because payments related to the corporate alternative minimum tax enacted in 2022 are deferred until 2024 as a result of the IRS reducing penalties. Once these deferrals end, receipts would decline to 1. 7 percent of GDP in 2025. Through 2034, receipts would increase to 1. 7 percent of GDP. It will decline steadily as a percentage of GDP, mainly due to the net effect of planned tax changes.

Inflation

Remittances from the Federal Reserve, i. e., the central bank's net income, will remain near zero from 2023 to 2028 as rising short-term interest rates have increased the Federal Reserve's interest expenses to such an extent that they exceed its income. CBO expects remittances to increase in 2029 and reach 0. 4% of GDP in 2034.

Interest Rates

Excise tax receipts are projected to increase from 2023 to 2026. Large amounts have been reported recently for refunds and tax credits for untaxed use of gasoline, which are not currently accounted for, so CBO projects them to decline in the coming years. Excise taxes will then gradually decline as a percentage of GDP, along with the tax base on which many excise taxes are levied.

This tax revenue was the highest relative to the size of the economy since the ratification of the Sixteenth Amendment in 1913, authorizing the federal government to collect income taxes. It will fall sharply to 8. 1% of GDP in 2023, approaching the 50-year average of 8. 0% of GDP (see Figure 1-5).

Income

As a Percentage of GDP

Personal income tax revenues fell sharply in 2023 from historically high levels in 2022, in part due to lower gains on asset sales and the Internal Revenue Service's partial extension of tax payment deadlines. Revenues are projected to increase in 2024 as these payment delays are resolved, and then again in 2026 and 2027.

Uncertainty About the Economic Outlook

Data Sources Data source: Congressional Budget Office. See www. cbo. gov/publication/59710#data.

GDP = Gross Domestic Product.

Comparison With CBO’s Previous Economic Projections

a. Excise taxes, Federal Reserve transfers, customs duties, estate and gift taxes, miscellaneous charges, and penalties.

The decline is due to several factors. First, capital gain realizations declined from historically high levels to levels closer to their long-term averages. Second, the IRS extended some filing deadlines for taxpayers in areas affected by natural disasters (including most of California), delaying tax payments that would have been made in 2023. Third, the Treasury Department reclassified some income that was recorded as personal income tax in the prior year as payroll taxes, and the adjustment was larger in 2023 than in 2022. 21

Personal income tax revenues declined in 2023 but are projected to recover to 8. 8% of GDP this year due to factors that the CBO does not expect to continue. These factors include delayed tax payments and significant reclassification of tax revenues. It then declines to 8. 6% of GDP in 2025, as no further extensions are expected. Due to planned tax changes and effective bracket creep, personal income tax receipts will rise as a percentage of GDP after 2025, reaching 9. 5% of GDP in 2034, 0. 8 percentage points higher than the 2024 projection. Offsetting factors contributing to this net increase are detailed below.

Planned Tax Changes. At the end of calendar year 2025, nearly all of the changes to the personal income tax made in the 2017 tax reform are set to expire under current law. CBO projects that these planned changes will be the largest driver of tax revenue growth on income over the next decade. The expiring provisions affect key elements of the personal income tax code, including the statutory tax rates and rate brackets, deductions, the size and refundability of the child tax credit, the 20 percent credit for certain business income, and the income levels at which the alternative minimum tax applies. 22 These changes will increase tax liability (the amount taxpayers owe) beginning in calendar year 2026 and will increase tax revenues in fiscal years 2026 and beyond. CBO projects that these tax changes will increase the personal income tax as a share of GDP by 0. 8 percentage points from 2025 to 2034.

Real Bracket Creep and Related Effects. The income thresholds for each individual income tax bracket rise with the rate of inflation (as measured by the chained consumer price index published by the Bureau of Labor Statistics). 23 When incomes rise faster than prices, as CBO projects for the period 2024–2034, more incomes are pushed into higher tax brackets. Many other parameters of the tax system, such as the standard deduction and the earned income credit, are also adjusted for inflation. However, certain parameters, such as the amount of the child tax credit, are fixed in nominal dollars and are not adjusted for inflation.

As a result, the individual income tax is not indexed to real growth (growth rates that exceed the rate of inflation). Instead, it is partially adjusted for inflation, and the adjustment has a time lag. These features of the system together result in a 0. 4 percentage point increase in the annual share of income in GDP from 2025 to 2034.

Other factors. Over the next decade, CBO projects a 0. 4 percentage point net decrease in the individual income tax as a share of GDP, due to several other factors.

Comparison With Other Economic Projections

The largest factor is the decline in capital gains realization relative to the size of the economy. Detailed tax return data for calendar year 2021 (the most recent available) show that capital gains realization was 8. 8% of GDP that year. CBO projects that it will decline after that, but reach 5. 1% of GDP in calendar year 2023, above the 40-year average of 3. 9% of GDP. CBO's baseline projections show that capital gains realization will continue to decline over the next decade, with levels consistent with the historical average after accounting for differences in applicable tax rates. This expected decline will cause the personal income tax as a share of GDP to decline by a total of about 0. 3 percentage points from 2025 to 2034.

Recent Economic Developments

Other factors are projected to cause the net realization rate to decline by an additional 0. 1 percentage point from 2024 to 2034. One factor is the IRS' decision to postpone the filing deadline for taxpayers affected by natural disasters until fiscal year 2024. This postponement will increase receipts this year (which would have been due in fiscal year 2023), but not in future years. In addition, CBO expects a small decrease in the share of business income that is subject to personal income tax rather than corporate income tax. CBO also expects the amount of mortgage interest that itemized income taxpayers can deduct to increase relative to the size of the economy.

Output and the Labor Market

Partially offsetting these trends are small increases in wages and taxable interest as a percentage of GDP, which are expected to boost tax revenues over the next decade. In addition, over the past few years, personal income tax revenues have been less correlated with the economy than is typical. In 2023, personal income tax revenues were below expectations, given the currently available data on the state of the economy and other factors that CBO was able to identify. This unexplained weakness in personal income tax revenues is expected to gradually resolve over the next few years.

The income from the salary tax, mainly for social insurance programs (mainly social security and med care), will be $ 1. 6 trillion in 2023 and 6. 0 % of GDP. According to CBO prediction, salary tax will decrease to 5. 9%of GDP in 2024, and will remain at its level until 10 years later. The initial decrease is due to the fact that the Ministry of Finance r e-classified the past $ 48 billion as salary tax.

Corporate income tax received in 2023 was $ 420 billion, 1. 6 % of GDP. The CBO expects that corporate income tax, which should be paid in 2023, will be paid in fiscal 2024, so that the amount of corporate income tax will rise to 2. 0%of GDP. 24 The CBO predicts that CBO will decrease to 1. 7%in 2025 after a temporary increase in payment due to such a delay in 2024. For the next ten years, the ratio of GDP continues to decrease gradually, 1. 3 % of GDP in 2034. The overall decrease in revenue during the 1 0-year prediction period is due to the postponement of tax payments, the provisions of the 2017 tax reform, and the various effects of other factors.

Postponed payment. It is estimated that the two measures have posted a total of about $ 60 billion from 2023 to 2024. First, IRS has postponed the payment deadline for taxpayers, including local corporations that have been damaged by natural disasters. Second, as part of the 2022 Japanese solution, a new lo w-cost corporate alternative tax on book income of a specific company (based on indicators after adjusting the income reported to the financial statements) was created. The tax was enforced in 2023, but IRS later acknowledged the penalties for companies that did not make an estimate in 2023. The addition of these additional collections predicts the increase in GDP by 0. 2%in 2024, but cannot be expected in the later years.

2017 tax law clause. Over the next 10 years, several clauses of the 2017 tax law will affect tax revenues for corporate income tax. According to the CBO prediction, these clauses reduce the amount of receipt in GDP between 2025 and 2034 by 0. 2 %. Social Insurance Program (mainly social security and med care) revenue from salary tax will be $ 1. 6 trillion in 2023 and 6. 0 % of GDP. According to CBO prediction, salary tax will decrease to 5. 9%of GDP in 2024, and will remain at its level until 10 years later. The initial decrease is due to the fact that the Ministry of Finance r e-classified the past $ 48 billion as salary tax.

Inflation and Interest Rates

2017 tax law clause. Over the next 10 years, several clauses of the 2017 tax law will affect tax revenues for corporate income tax. According to the CBO prediction, these clauses reduce the amount of receipt in GDP between 2025 and 2034 by 0. 2 %. The income from the salary tax, mainly for social insurance programs (mainly social security and med care), is $ 1. 6 trillion in 2023 and 6. 0 % of GDP. According to CBO prediction, salary tax will decrease to 5. 9%of GDP in 2024, and will remain at its level until 10 years later. The initial decrease is due to the fact that the Ministry of Finance r e-classified the past $ 48 billion as salary tax.

Corporate income tax received in 2023 was $ 420 billion, 1. 6 % of GDP. CBO expects corporate income tax to be paid in 2023 in FY2024, so the amount of corporate income tax receipt in 2024 will rise to 2. 0%of GDP. 24 The CBO predicts that the CBO will decrease to 1. 7%in 2025 after a temporary increase in payment in 2024 due to such a delay in 2024. For the next ten years, the ratio of GDP continues to decrease gradually, 1. 3 % of GDP in 2034. The overall decrease in revenue during the 1 0-year prediction period is due to the postponement of tax payments, the provisions of the 2017 tax reform, and the various effects due to other factors.

Projections of Gross Domestic Product and Its Components

Payment postponed. It is estimated that the two measures have posted a total of about $ 60 billion from 2023 to 2024. First, IRS has postponed the payment deadline for taxpayers, including local corporations that have been damaged by natural disasters. Second, as part of the 2022 Japanese solution, a new lo w-cost corporate alternative tax on book income of a specific company (based on indicators after adjusting the income reported to the financial statements) was created. The tax was enforced in 2023, but IRS later acknowledged the penalties for companies that did not make an estimate in 2023. The addition of these additional collections is expected to increase the tax revenue of GDP by 0. 2%in 2024, but cannot be expected in the later years.

2017 tax law clause. Over the next 10 years, some clauses of the 2017 tax law will affect tax revenue of corporate income tax. According to the CBO prediction, these clauses reduce the amount of receipt in GDP between 2025 and 2034 by 0. 2 %.

Table 2-2.

Projected Growth of Real GDP and Its Components

Data source data source: US Council Budget Bureau. See www. cbo. gov/publication/59710#data.

Another clause of the Act, which was enforced in 2022, is obliged to record and amortize companies for a specific expenditure for research and development over five years. This change will increase the amount received in 2023 in 2023, and this will continue for several years, as companies deducted in advance. (Furthermore, the provisions that can immediately deduct 100 % of capital investment from the taxable income will be gradually abolished from 2023 to 2026. By reducing the deduction amount in the first year when new investment was made. The amount of receipt during the step reduction increases, but there is almost no impact up to 2034.

In other clauses of this law, the rules on taxation on overseas profits have changed. These changes are scheduled to be implemented in 2026, and the income in the subsequent fiscal year will increase. However, this increase is offset by the decrease in the changes described above. In accordance with one of the provisions of the law, companies have been paying temporary taxes for specific overseas profits since 2018. The tax was applied to overseas profits that had been deferred in US taxes in previous laws. The tax on these profits is based on the profit amount at the end of 2017 (unrelated to future business activities), and can be paid over eight years. Therefore, according to the CBO base line prediction, the payment amount will increase at a variety of degrees from 2023 to 2026, but the number of years after 2026 will decrease after 2026. It will be.

Another clause of the Act, which was enforced in 2022, is obliged to record and amortize companies for a specific expenditure for research and development over five years. This change will increase the amount received in 2023 in 2023, and this will continue for several years, as companies deducted in advance. (Furthermore, the provisions that can immediately deduct 100 % of capital investment from tax income will be gradually abolished between 2023 and 2026. By reducing the deduction amount in the first year of new investment. The amount of receipt during the step reduction increases, but there is almost no impact up to 2034.

In other clauses of this law, the rules on taxation on overseas profits have changed. These changes are scheduled to be implemented in 2026, and the income in the subsequent fiscal year will increase. However, this increase is offset by the decrease in the changes described above. In accordance with one of the clauses of the law, companies have paid temporary taxes for specific overseas profits since 2018. The tax was applied to overseas profits that had been deferred in US taxes in previous laws. The tax on these profits is based on the profit amount at the end of 2017 (unrelated to future business activities), and can be paid over eight years. Therefore, according to the CBO base line prediction, the payment amount will increase at a variety of degrees from 2023 to 2026, but the year after that will not increase, so the amount received for GDP will decrease after 2026. It will be.

Another clause of the Act, which was enforced in 2022, is obliged to record and amortize companies for a specific expenditure for research and development over five years. This change will increase the amount received in 2023 in 2023, and this will continue for several years, as companies deducted in advance. (Furthermore, the provisions that can immediately deduct 100 % of capital investment from tax income will be gradually abolished between 2023 and 2026. By reducing the deduction amount in the first year of new investment. The amount of receipt during the step reduction increases, but there is almost no impact up to 2034.

Other factors. Due to various other factors, it is expected that the tax revenue of corporate income tax for GDP will decrease by further reducing by 0. 3%between 2025 and 2034. The most prominent is that the interests of corporate domestic activities will decrease over the next 10 years, and the proportion of taxes in the economy will be reduced. The CBO is expected to apply for more tax deductions in the future, as international companies are expected to increase the number of overseas profits earned in more taxes and regions. It is predicted that the amount of taxation in the year other than the most recent taxation year of companies will decrease in the next 10 years. These collections have been high in tax debt over the past few years, but CBO predicts to the same level as the average over the past decade.

The income from all sources other than the individual income tax, salary tax, and corporate income tax was $ 229 billion in 2023 and 0. 8 % of GDP (see Table 1-8). These income are expected to maintain this level for several years from this year. The remittance from the Federal Reserve, which has almost stopped in 2023, is expected to resume at a higher price from 2029, so CBO will rise to 1. 2%of GDP by 2034.

Box 2-1.

Economic Effects of CBO’s Revised Population Projections

$ 100 million

Data Source US Congress Budget Bureau. See www. cbo. gov/publication/59710#data.

Heritage tax and gift tax. In 2023, the income from heritage tax and gift tax was $ 34 billion, 0. 1 % of GDP. From 2026 to 2027, the 2017 tax law, which doubled the ta x-exempt frame of inheritance tax and gift tax, is expected to increase by 45 % because it will expire at the end of 2025. In 2034, these income will be 0. 2%of GDP.

Population Projections

Items tax. Product tax is taxed on the production and purchase of specific types of products and services, such as car fuel, cigarettes, alcohol, and aviation. Ta. The tax revenue will increase slightly to 2026, but will eventually decrease to 0. 2 % of GDP in 2034 in CBO. Other factors. Due to various other factors, it is expected that the tax revenue of corporate income tax for GDP will decrease by further reducing by 0. 3%between 2025 and 2034. The most prominent is that the interests of corporate domestic activities will decrease over the next 10 years, and the proportion of taxes in the economy will be reduced. The CBO is expected to apply for more tax deductions in the future, as international companies are expected to increase the number of overseas profits earned in more taxes and regions. It is predicted that the amount of taxation in the year other than the most recent taxation year of companies will decrease in the next 10 years. These collections have been high in tax debt over the past few years, but CBO predicts to the same level as the average over the past decade.

How Changes in the Projected Population Affect the Economy

$ 100 million

Data Source US Congress Budget Bureau. See www. cbo. gov/publication/59710#data.

Items tax. Product tax is taxed on the production and purchase of specific types of products and services, such as car fuel, cigarettes, alcohol, and aviation. Ta. The tax revenue will increase slightly to 2026, but will eventually decrease to 0. 2 % of GDP in 2034 in CBO. Other factors. Due to various other factors, it is expected that the tax revenue of corporate income tax for GDP will decrease by further reducing by 0. 3%between 2025 and 2034. The most prominent is that the interests of corporate domestic activities will decrease over the next 10 years, and the proportion of taxes in the economy will be reduced. The CBO is expected to apply for more tax deductions in the future, as international companies are expected to increase the number of overseas profits earned in more taxes and regions. It is predicted that the amount of taxation in the year other than the most recent taxation year of companies will decrease in the next 10 years. These collections have been high in tax debt over the past few years, but CBO predicts to the same level as the average over the past decade.

$ 100 million

Data Source US Congress Budget Bureau. See www. cbo. gov/publication/59710#data.

The initial increase in receipts reflects CBO's expectation that the large amounts reported for refunds and tax credits resulting from untaxed use of gasoline will not continue. These amounts, estimated to have totaled $18 billion last year, did not exceed $2 billion the year before. CBO cannot determine the source of the increase in refunds and tax credits, and therefore projects that they will gradually disappear over the next few years. After 2026, the number of units of taxable goods and services is projected to grow or decline slowly, so excise taxes will decline in relation to GDP. (For example, CBO projects that gasoline taxes will decline as average automobile fuel economy improves and gasoline consumption declines. CBO also projects that excise taxes on tobacco and alcohol products will decline over the next decade as importers seek to claim refunds of these taxes. 25

Tariffs. Collections of tariffs on certain imports totaled $80 billion, or 0. 3 percent of GDP, in 2023. The share of tariffs in GDP through 2034 is projected to remain near 0. 3 percent but decline slightly. This slight decline reflects CBO's expectation that some imports from countries subject to additional tariffs imposed since 2018 (especially those that apply to a large proportion of imports from China) will continue to be diverted to other countries. (These additional tariffs increased tariffs by about 0. 2 percent of GDP from 2020 to 2022, but the effect declined in 2023 as tariffs were significantly reduced.) CBO The baseline projections reflect the assumption that tariffs and subsequent administration waivers will continue at the rates they were in on December 5, 2023, when CBO completed its economic projections.

Consumer Spending

The remittance from the Federal Reserve Council to the Ministry of Finance has decreased from $ 107 billion (0. 4 % of GDP) in 2022 to $ 1 billion in 2023. This sudden depression has increased the interest cost of the federal preparation system due to the rise in shor t-term interest rates, exceeding its income. If the Federal Reserve Bank expenses exceed the income, the difference will be recorded as deferred assets (or negative liabilities) and remittances will be suspended to the Ministry of Finance.

The CBO estimates that the entire federal preparation system will lose until 2025, but according to the CBO base line prediction, some federal preparation banks may make money to the Ministry of Finance. It is said that a small amount of money will be made for the next few years. If the Federal Reserve Council (Fed) declines interest rates due to a decline in inflation, the CBO will return to net income in 2026. After that, the remittance returns to 0. 4%of the GDP, reflecting the difference between the income obtained by the Federal Reserve from the asset portfolio and the interest paid to the bank depositing the central bank. The estimation of the remittance by the CBO depends on the trend of shor t-term interest rates during the predictive period, so it is highly uncertain.

Other fees, fines, and other fees and fines will be $ 38 billion in 2023 and 0. 1 % of GDP. It is expected that these income will remain at 0. 1 % of GDP every year until 2034.

Many exemptions, deductions, deductions, and preferential tax rates in the federal tax system reduce revenue than if any tax rate is applied. This provision resembles the federal government's expenditure and is called tax expenditure because it is one of the budget deficits. 26 Remittance from the Federal Preparatory System Council to the Ministry of Finance fell to less than $ 1. 07 billion in 2022 (0. 4 % of GDP) to $ 1 billion in 2023. This sudden depression has increased the interest cost of the federal preparation system due to the rise in shor t-term interest rates, exceeding its income. If the Federal Reserve Bank expenses exceed the income, the difference will be recorded as deferred assets (or negative liabilities) and remittances will be suspended to the Ministry of Finance.

Figure 2-2.

Spending on Consumer Goods as a Share of Nominal Consumer Spending

Data source data source: US Council Budget Bureau. See www. cbo. gov/publication/59710#data.

Many exemptions, deductions, deductions, and preferential tax rates in the federal tax system reduce revenue than if any tax rate is applied. This provision resembles the federal government's expenditure and is called tax expenditure because it is one of the budget deficits. The remittance from the Central Bank of Federation to the Ministry of Finance from the Federal Reserve has decreased from $ 107 billion in 2022 to $ 1 billion in 2023. This sudden depression has increased the interest cost of the federal preparation system due to the rise in shor t-term interest rates, exceeding its income. If the Federal Reserve Bank expenses exceed the income, the difference will be recorded as deferred assets (or negative liabilities) and remittances will be suspended to the Ministry of Finance.

A. Income from social security salary tax.

Business Investment

Other fees, fines, and other fees and fines will be $ 38 billion in 2023 and 0. 1 % of GDP. It is expected that these income will remain at 0. 1 % of GDP every year until 2034.

Like federal appropriations, tax expenditures provide financial support to specific activities, organizations, or groups. However, tax expenditures are treated differently in the budget than expenditure programs. Tax expenditures increase the budget deficit by reducing government revenues, but revenue losses attributable to specific tax expenditures (or to tax expenditures in general) are not usually accounted for separately in the budget, unlike expenditures for each expenditure program. 27 The Congressional Budget Act of 1974 requires tax expenditures to be included in the federal budget. The Administration periodically publishes estimates of tax expenditures prepared by the Treasury Department's Office of Tax Analysis, and Congress publishes estimates prepared by the staff of the Joint Committee on Taxation (JCT). 28

Residential Investment

Tax expenditures have a significant impact on the federal budget. In fiscal year 2024, all tax expenditures on personal and corporate income taxes (including the impact on payroll taxes) are estimated to be $2. 1 trillion, or 7. 4 percent of GDP. 29 This amount, calculated by CBO based on estimates prepared by the JCT, is about 43 percent of total federal revenues in 2024 and exceeds the expenditures projected for all discretionary programs combined (see Figure 1-6).

As a percentage of GDP

Tax expenditures are provisions in the tax code (such as tax credits and tax allowances) that would otherwise cause revenues to fall. Like federal spending programs, tax expenditures increase the budget deficit. In 2024, total revenues foregone due to tax expenditures are projected to be equal to 7. 4 percent of GDP.

Government Purchases

Data Sources Data source: Congressional Budget Office, tax expenditures estimates prepared by the staff of the Joint Committee on Taxation. See www. cbo. gov/publication/59710#data.

GDP = Gross Domestic Product.

Exports and Imports

a. When October 1 (the start of a fiscal year) falls on a weekend, certain payments that would normally be made on that date are made at the end of September and are therefore shifted to the previous fiscal year. The expenditures here are adjusted to eliminate the effect of such timing shifts.

b. The expenditure portion of the refundable tax credit is estimated to be 0. 6% of GDP in 2024 and is included in tax expenditures as well as mandatory expenditures.

c. This sum is the total of the estimates by each tax expenditure, and the interaction between each tax spending is not taken into account. However, in 2024, the CBO estimated that the total of all tax spending would be almost equal to the estimation of each tax expenditure. The estimation of tax expenditures is based on the behavior of people in the current tax law, so it is collected when the regulations are abolished and the taxpayer adjusts the action accordingly. It does not reflect the amount of income.

Simply combining specific tax spending estimates does not take into account the interactions that can occur between these tax terms. For example, the total tax expenditure for all items deduction is smaller than the total of individual tax spending for each deduction. The reason is that if there is no deduction by item, all taxpayers will apply for a standard deduction. However, even if only one item deduction or some are deleted, many taxpayers will choose a deduction by item. Even if the income deduction is abolished, many taxpayers will choose a deduction by item. The higher the tax rate, the higher the tax rate, which guarantees the opposite of when the income deduction is abolished. In other words, tax expenditures that combine all income deductions are larger than the tax spending of each income deduction. In 2024, these factors and other factors are expected to be almost offset, so the total tax expenditure is expected to be almost equal to the total of each tax expenditure.

The estimation of tax expenditures is the difference between the tax burden of households and companies under the current law, and the tax burden that may occur if the taxpayer's behavior has not changed. It is measured. Such estimates do not indicate the income amount that will rise when those provisions are abolished. This is because the incentive changes caused by abolishing these provisions will revise their actions in a way that reduces their impact on income. c. This sum is the total of the estimates by each tax expenditure, and the interaction between each tax expenditure is not considered. However, in 2024, the CBO estimated that the total of all tax spending would be almost equal to the estimation of each tax expenditure. The estimation of tax expenditures is based on the behavior of people in the current tax law, so it is collected when the regulations are abolished and the taxpayer adjusts the action accordingly. It does not reflect the amount of income.

Potential Output

The estimation of tax expenditures is the difference between the tax burden of households and companies under the current law, and the tax burden that may occur if the taxpayer's behavior has not changed. It is measured. Such estimates do not indicate the income amount that will rise when those provisions are abolished. This is because the incentive changes caused by abolishing these provisions will revise their actions in a way that reduces their impact on income. c. This sum is the total of the estimates by each tax expenditure, and the interaction between each tax spending is not taken into account. However, in 2024, the CBO estimated that the total of all tax spending would be almost equal to the estimation of each tax expenditure. The estimation of tax expenditures is based on the behavior of people in the current tax law, so it is collected when the regulations are abolished and the taxpayer adjusts the action accordingly. It does not reflect the amount of income.

Table 2-3.

Key Inputs in CBO’s Projections of Real Potential GDP

See the diagram of box 2-1.

In the next 10 years, the United States will face a harsh financial outlook. According to the CBO prediction, the increase in expenditures (mainly increased interest payments and increased expenditures to major medical programs) exceeds their income, so the deficit is expanded compared to GDP. These expansion of the deficit will dramatically increase federal debt over the next 30 years (see Table 1-9). In 2054, the debt of the people reached 172%of GDP, which is expected to be much larger than before (see Figure 1-2).

Real GDP growth averages 2. 2% per year from 2025 through 2028.

Data Source US Congress Budget Bureau. See www. cbo. gov/publication/59710#data.

This table meets the requirements prescribed in Article 311 of S. Con. Res. 11 (simultaneous resolution for the 2016 budget).

GDP = Gross domestic product.

a. Remittance from the goods tax, the federal preparation system, tariffs, inheritance taxes, gift, miscellaneous expenses, fines.

b. b. If October 1 (start date start date) is on the weekend, a specific payment that should be made on that day will be made at the end of September, so it will be shifted from the previous year. Expenditures have been adjusted to eliminate the effects of such a time.

c. Medicare (after deduction of insurance premiums), spending on medicade, child health insurance programs, and subsidies for health insurance and related expenditures purchased through market established under the Affordable Care Act (Affordable Care Act) It consists of.

Figure 2-3.

Average Annual Growth of Real Potential GDP and Its Components

d. d. If the expenditure exceeds the income, it will be in the red. Since the value of this line is calculated by subtracting the expenditure from the income, the negative value indicates a contribution to the deficit or the deficit.

See the diagram of box 2-1.

GDP ratio

Data Source US Congress Budget Bureau. See www. cbo. gov/publication/59710#data.

Real GDP growth averages 2. 2% per year from 2025 through 2028.

GDP = Gross domestic product.

a. Remittance from the goods tax, the federal preparation system, tariffs, inheritance taxes, gift, miscellaneous expenses, fines.

Projections of the Labor Market

Figure 2-4.

Employment, Unemployment, and Wage Growth

E. E. Includes salary taxes other than the federal government on behalf of the employees; these payments are domestic transactions. In addition, the income tax paid for the social security benefits is included, and these are recorded in the trust fund.

F. F. Programs are not included in the operation of the program. In the case of social security, the expenditure does not include an i n-government offset revenue from the federal government agencies paid to the Social Security Trust Fund to the employment tax. In the next 10 years, the United States will face a harsh financial outlook. According to the CBO prediction, the increase in expenditures (mainly increased interest payments and increased expenditures to major medical programs) exceeds their income, so the deficit is expanded compared to GDP. These expansion of the deficit will dramatically increase federal debt over the next 30 years (see Table 1-9). In 2054, the debt of the people reached 172%of GDP, which is expected to be much larger than before (see Figure 1-2).

GDP ratio

Data Source US Congress Budget Bureau. See www. cbo. gov/publication/59710#data.

This table meets the requirements prescribed in Article 311 of S. Con. Res. 11 (simultaneous resolution for the 2016 budget).

GDP = Gross domestic product.

a. Remittance from the goods tax, the federal preparation system, tariffs, inheritance taxes, gift, miscellaneous expenses, fines.

Employment

c. Medicare (after deduction of insurance premiums), expenditures on medicade, child health insurance program, and subsidies for health insurance and related expenditures purchased through the market established under the Affordable Care Act (AFFORDABLE CARE ACT). It consists of.

Unemployment

Labor Force

g. The contribution to the deficit shown in this line differs from the change in the trust fund balance of the relevant program. It does not include intragovernmental transactions, interest earned on balances, or expenditures related to the operation of the program.

As a percentage of GDP, CBO’s current projections for the federal debt from 2034 through 2053 are smaller than those projected in June 2023. 30 The deficit over this period is also smaller than projected in June of last year. (See Box 1-3 for details on CBO’s long-range budget projections.)

Hourly Wages and Salaries

The Congressional Budget Office’s long-range projections follow the agency’s 10-year baseline budget projections and extend its underlying concepts for an additional 20 years, in this case to 2054. 1 These projections are inherently uncertain because budget outcomes are difficult to predict, especially over long periods of time. But even if the outlook were more favorable than CBO's projections, it would be virtually certain that, unless current law were changed, the public's federal debt, measured relative to the size of the economy, would be much larger in 30 years than it is today.

Projections of Inflation and Interest Rates

CBO projects that the federal deficit would grow from 6. 1 percent of gross domestic product (GDP) in 2034 to 9. 1 percent in 2054. The primary deficit, or the deficit excluding interest payments, would grow much slower than the overall deficit, from 2. 2 percent of GDP in 2034 to 2. 6 percent in 2054.

As a result of the deficit, the public's federal debt would rise from 116 percent of GDP in 2034 to 172 percent of GDP in 2054. Such a debt surge would slow economic growth and drive up interest payments to foreign countries that hold U. S. Treasury securities, posing significant risks to the fiscal and economic outlook. It may also constrain lawmakers' policy choices.

Inflation

CBO projects total spending to increase from 24. 1 percent of GDP in 2034 to 27. 9 percent of GDP in 2054. Rising interest costs and higher spending on major health programs, especially Medicare, are the major drivers of this increase. 2 Rising interest rates and rising debt would cause net interest costs to increase from 3. 9 percent of GDP to 6. 5 percent of GDP from 2034 to 2054.

Figure 2-5.

Overall Inflation, Core Inflation, and Contributions to Overall Inflation

Noninterest spending, or spending other than interest, is projected to increase from 20. 2 percent of GDP to 21. 4 percent over the 20-year period. Mandatory spending increases from 15. 1 percent of GDP in 2034 to 16. 5 percent of GDP in 2054. Discretionary spending is projected to decrease from 5. 1 percent of GDP in 2034 to 4. 9 percent of GDP in 2038 and remain constant thereafter.

Revenues are projected by CBO to increase from 17. 9 percent of GDP in 2034 to 18. 8 percent of GDP in 2054. Personal income tax revenues increase as a share of GDP because higher real income growth (growth rates adjusted to remove the effects of inflation) increases the share of income going to higher-income earners. Other tax revenues are little changed on net from 2034 to 2054.

Data source data source: US Council Budget Bureau. See www. cbo. gov/publication/59710#data.

Changes in Deficits and Debt. Throughout the 2034-2053 period, the federal total deficit and primary deficit, measured as a percentage of GDP, are projected to be smaller (by an average of 0. 7 percentage points each) than projected in June 2023. As a result of the deficit changes, the federal debt as a percentage of GDP is projected to decline and grow more slowly from 2034 to 2053 than last year's projection. In 2053, this indicator is projected to decline by 12 percentage points from last year.

Changes in expenditure. According to the GDP ratio, the total expenditure from 2034 to 2053 is 0. 9 % lower on average in CBO's current forecast than in June 2023. The ratio of no n-interest rates in GDP is 0. 9 % lower on average in CBO's current prediction than last year.

A. Income from social security salary tax.

Changes in revenue. Current predictions on the CBO about the percentage of revenue from 2034 to 2053 are 0. 2 % lower on average to the forecast in June 2023. There are several reasons why the CBO has revised the revenue prediction of the personal income tax, but the biggest change is that the CBO predicts that the amount of mortgage interests subject to income deduction will increase compared to June forecasts. It is.

1. The CBO has updated lon g-term predictions of population, economic and revenue since 2034. However, instead of a complete update, the CBO has a simplified approach of these years. The CBO plans to announce a lon g-renew that has been completely updated in late 2024.

2. 2. Spending of major medical programs includes medical insurance, medical insurance premiums purchased through the market established based on the medical expenses adaptation law (affordable care act), in addition to the med care, medical and medical insurance programs (Affordable Care Act). It consists of tax deduction and related expenditures. Insurance tax deduction is an auxiliary of health insurance purchases. Changes in expenditure. According to the GDP ratio, the total expenditure from 2034 to 2053 is 0. 9 % lower on average in CBO's current forecast than in June 2023. The ratio of no n-interest rates in GDP is 0. 9 % lower on average in CBO's current prediction than last year.

In the relationship between the CBO forecast and the economy, the change in total expenditures is largely due to the reduction of discretionary expenditures from 2034 to 2053 and the change in net peculiar costs. Looking at the ratio of net pond costs for GDP, it is higher from 2034 to 2046 than last year's forecast, and is lower from 2047 to 2053. In other words, compared to last year's prediction, the increase in net interest rate costs compared to GDP partly offers the decrease in discretionary spending in this period. By the end of the 2 0-year period, this year's forecasts have both discretionary expenditures and pure growth than last year's forecast.

2. 2. Spending of major medical programs includes medical insurance, medical insurance premiums purchased through the market established based on the medical expenses adaptation law (affordable care act), in addition to the med care, medical and medical insurance programs (Affordable Care Act). It consists of tax deduction and related expenditures. Insurance tax deduction is an auxiliary of health insurance purchases. Changes in expenditure. According to the GDP ratio, the total expenditure from 2034 to 2053 is 0. 9 % lower on average in CBO's current forecast than in June 2023. The ratio of no n-interest rates in GDP is 0. 9 % lower on average in CBO's current prediction than last year.

Interest Rates

Figure 2-6.

Interest Rates

CBO's baseline budget projections are intended to show what federal spending, revenues, deficits, and debt would be if current laws governing spending and taxes remained generally unchanged. Changes in law, especially those affecting fiscal policy, could result in budget outcomes that differ materially from the baseline.

Even if federal law were to remain unchanged for the next decade, actual budget outcomes would differ from CBO's baseline projections because of unanticipated changes in economic conditions and other factors that affect federal spending and revenues, such as administrative actions, regulatory changes, and judicial decisions. For example, CBO's projections of spending and revenues, and therefore projections of deficits and debt, depend in part on CBO's economic projections, including projections of wage growth, interest rates, inflation, and economic growth. Actual outcomes of these variables are likely to differ from CBO's projections.

Comparing CBO's past projections with actual outcomes illustrates the magnitude of uncertainty in CBO's budget projections. 31 Based on its analysis of past projections, CBO estimates that under current law, there is about a two-thirds chance that the 2025 budget deficit will be between 5. 0 percent and 7. 1 percent of GDP (see Figure 1-7). (The baseline projection for the deficit that year is 6. 1 percent of GDP): CBO estimates that under current law, there is about a two-thirds chance that the deficit that year will be between 2. 9 percent and 7. 9 percent of GDP. (The baseline forecast for this year is 5. 4% of GDP.

As a percentage of GDP

CBO's baseline forecast has the deficit for 2029 at 5. 4% of GDP. CBO estimates that there is about a two-thirds chance that the deficit for this year will be between 2. 9% and 7. 9% of GDP.

Data source Congressional Budget Office. See www. cbo. gov/publication/59710#data.

Projections of Income

The shaded area around CBO's baseline deficit projections is based on the margin of error in CBO's 1-, 2-, 3-, 4-, 5-, and 6-year deficit projections from FY1985 through FY2023. Actual results will be affected by legislation enacted in the future. The effects of future legislation are not reflected in this figure.

Labor Income

If October 1 (the start of a fiscal year) falls on a weekend, payments that would normally be made on that date are made at the end of September and therefore slip into the previous fiscal year. All projections presented here have been adjusted to remove the effects of these timing differences. Historical amounts have been adjusted as far back as available data will allow.

When expenditures exceed revenues, the result is a deficit. In this figure, deficits and surpluses are calculated by subtracting revenues from expenditures, so positive values indicate deficits. When expenditures are subtracted from revenues, as noted in the federal budget and in tables in this chapter, negative values indicate deficits and positive values indicate surpluses.

GDP = gross domestic product.

1. Congressional Budget Office, Cost Estimates for H. R. 2872, "Further Supplemental Continuing Appropriations and Other Extensions Act of 2024," (Jan. 17, 2024), www. cbo. gov/publication/59893.

Corporate Profits

2. October 1 also falls on a weekend in 2028, 2033, and 2034, so certain payments due on that date will be made at the end of September and accounted for in the prior fiscal year. These timing differences will significantly increase spending and the budget deficit in fiscal years 2028 and 2033, but will decrease federal spending and the budget deficit in fiscal year 2029.

Uncertainty About the Economic Outlook

3. The spending reductions the Administration recorded in fiscal year 2023 were smaller than those recorded in fiscal year 2022, primarily due to the new income-contingent repayment structure the Administration finalized in fiscal year 2023.

4. The small amount of publicly held debt is primarily issued by other agencies, such as the Tennessee Valley Authority.

Uncertainty in the Short Run

5. For more information on other financing instruments and the broader federal debt, see Congressional Budget Office, Federal Debt: An Introduction (March 2020), www. cbo. gov/publication/56165.

6. The Federal Finance Bank is a government corporation under the general supervision of the Treasury Department that helps administer the borrowing and lending programs of federal agencies. The bank can issue its own debt up to $15 billion, which does not count toward the debt limit.

7. Every year, some forced programs are changed by the annual budget law. Such changes may increase or decrease the spending of the affected program over a year or multiple years. Furthermore, some obligatory programs (such as Medicade and supplementary nutritional aid programs) are deemed to be obligatory, but benefits are paid from the amount specified by the budget method.

8. The provisions of the Families First Coronavirus Response (P. L. 116-127) have mandated each state in the program until the emergency of public health due to Coronavirus is over. The emergency cancellation declaration came into effect on May 11, 2023.

9. Coronavirus refund tax deduction is a group of taxes for employers to cover the cost of illness, family leave, employee leave, and continuation of health insurance for specific workers for 2020 and 2021. It is a deduction. Employers can continue to claim these temporary tax deductions in the revised declaration, but CBO predicts that these claims will decrease over time.

10. Budgeting (financing) is the authority given by the Federal Law to impose a fiscal duty to bring an immediate or future expenditure of federal government funds.

11. The funds to be eligible for the FRA 103 are the J parts of the infrastructure investment and employment law, Part B of the Superat Safety Regional Law, and Article 443 of the 2023 consecutiv e-yea r-olds (harmful substance Superfunds). Derived from the collected funds as an emergency requirement).

12. Obligation Limitation (Obligation Limitation) Debt Restrictions are restrictions on the amount, purpose, or available period of expenditure authority, and is usually included in the Memorial Law. This restriction often affects the budget authority specified by the approval method. Many transportation program budget permissions are forced, but spending due to the duty restrictions of these programs is considered discretionary.

Uncertainty Beyond the Short Run

13. Some funds are not restricted by the upper limit, but the funds may be reduced based on the statutory procedures for implementing the upper limit. 7. Every year, some forced programs are changed by the annual budget law. Such changes may increase or decrease the spending of the affected program over a year or multiple years. Furthermore, some obligatory programs (such as Medicade and supplementary nutritional assistance programs) are deemed to be obligatory, but benefits are paid from the amount specified by the budget method.

10. Budgeting (funding) is the authority given by the Federal Law to impose a fiscal duty to bring an immediate or future expenditure of federal government funds.

Quantifying the Uncertainty of CBO’s Projections

13. Some funds are not restricted by the upper limit, but the funds may be reduced based on the statutory procedures for implementing the upper limit. 7. Every year, some forced programs are changed by the annual budget law. Such changes may increase or decrease the spending of the affected program over a year or multiple years. Furthermore, some obligatory programs (such as Medicade and supplementary nutritional aid programs) are deemed to be obligatory, but benefits are paid from the amount specified by the budget method.

Figure 2-7.

Uncertainty of CBO’s Projections of Output, Unemployment, Inflation, and Interest Rates

10. Budgeting (financing) is the authority given by the Federal Law to impose a fiscal duty to bring an immediate or future expenditure of federal government funds.

12. Obligation Limitation (Obligation Limitation) Debt Restrictions are restrictions on the amount, purpose, or available period of expenditure authority, and is usually included in the Memorial Law. This restriction often affects the budget authority specified by the approval method. Many transportation program budget permissions are forced, but expenditures due to the duty restrictions of these programs are considered discretionary.

13. Some funds are not restricted by the upper limit, but the funds may be reduced based on the statutory procedures for implementing the upper limit.

14. Funds designated for emergency requirements under the Deficit Control Act are subject to an increase in the ceiling by the amount of funds provided. Section 103 of the FRA provided that discretionary emergency designated funds provided by the Infrastructure Investment and Jobs Act, the Bipartisan Safe Neighborhoods Act, and Section 443 of the Consolidated Appropriations Act of 2023 do not count toward the ceiling.

15. The average interest rate on the debt reflects the interest rates on Treasury securities of different maturities, the maturity mix of the securities issued, and the cost of inflation-indexed payments made on some of these securities.

16. CBO's projections are in accordance with the provisions of Section 257 of the Deficit Control Act, which requires CBO to project expenditures for certain programs, including Social Security and Medicare, on the assumption that they will be fully funded and therefore capable of making all scheduled payments, even if the trust funds associated with these programs do not have sufficient resources. For example, CBO estimates that the Highway Trust Fund will be depleted in 2028 and the Old-Age and Survivors Insurance Trust Fund will be depleted in 2033. Nonetheless, CBO’s baseline projections reflect the assumption that there are sufficient funds to make the full payments required by law. In addition, the Deficit Control Act requires CBO to project spending for certain mandatory programs beyond their scheduled deadlines. Other rules governing the development of CBO’s baseline projections were developed by CBO in consultation with the House and Senate Budget Committees. For more information, see Congressional Budget Office, CBO Explains How It Develops the Budget Baseline (April 2023), www. cbo. gov/publication/58916, and CBO Explains the Statutory Foundations of Its Budget Baseline (May 2023), www. cbo. gov/publication/58955.

GDP = gross domestic product,*= 0. 05 % of GDP.

Comparison With CBO’s February 2023 Economic Projections

18. The Deficit Control Act specifies the inflation measures that CBO should use in preparing its projections: the private sector wage and salary employment cost index is used to adjust discretionary funding related to Federal employees, and the Gross Domestic Product Price Index is used to adjust other discretionary funding. For accounts with pre-budget enacted, CBO projected future discretionary funding for unfunded years.

Table 2-4.

CBO’s Current and Previous Economic Projections for Calendar Years 2023 to 2033

See the diagram of box 2-1.

20. To assess the percentage of the increase in net interest costs that is attributable to changes in average interest rates, CBO first considered a benchmark scenario in which interest rates remain unchanged after 2023 and there are no major deficits that increase the amount of debt. CBO estimated the increase in net interest costs relative to the benchmark due to the change in average interest rates in CBO's projections (using a scenario in which interest rates change and there is no primary deficit) and the primary deficit in CBO's projections (using a scenario in which there is a deficit and the average interest rate does not change). CBO used the relative magnitudes of these estimates to calculate how much of the total increase in net interest costs is attributable to the increase in the average interest rate by prorating the interaction between the average interest rate and the primary deficit.

GDP = gross domestic product,*= 0. 05 % of GDP.

A. Income from social security salary tax.

The primary deficit is 2. 1 % of GDP on average from 2025 to 2034, and is added to the debt held by the people every year.

According to CBO predictions, the average average interest rate of federal debt accounts for about tw o-thirds of the increase in ne t-payment costs from 2025 to 2034. 20

26. Article 3 (3) of the 1974 parliamentary budget and the suppression law, which is legislated in Article 622 (3) (2023), Article 622 (3) (2023), is "special from total income from total income. It is defined as the provisions of the Federal Tax Law, which allow exclusion, exemption, and deductions, or a revenue loss due to the provisions of providing special deductions, preferential tax rates, and tax payment obligations. "

27. However, among the tax deductions that can be refunded, exceeding the taxpayer's duty of tax is exceptional, and the amount is recorded as an obligatory expenditure. 22. alternative minimal tax is similar to normal income tax, but has a low exemption, deduction, and tax rate. Those who declare personal income tax must calculate the tax to be paid under the system and pay the larger of the two.

Output

23. For more information, see the US Congress Budget Bureau, "The increase in income in the lon g-term budget forecast of CBO on tax revenue" (June 25, 2019), www. cbo. gov/Publication/55368.

24. For more information about how CBO predicts the corporate income tax revenue, "How Cbo Projects Corporate InCome Tax Revenures" (Octom 5, 2023), Publication/59436 I want to be referred.

25. On August 23, 2021, the US Federal Touring Court supported the US International Trade Court of the National Manufacturers Association and Finance. As a result of this ruling, cigarettes and alcohol products, which are usually imposed on goods taxes, can be collected for exports or discarded products if they can be compared with export or discarded products. Even if it is not, you will be able to receive the refund of the article tax. Such refunds are often called double refunds.

27. However, among the tax deductions that can be refunded, exceeding the taxpayer's duty of tax is exceptional, and the amount is recorded as an obligatory expenditure. 22. alternative minimum tax is similar to normal income tax, but has a small exemption, deduction, and tax rate. Those who declare personal income tax must calculate the tax to be paid under the system and pay the larger of the two.
23. For more information, see the US Congress Budget Bureau, "The increase in income in the lon g-term budget forecast of CBO on tax revenue" (June 25, 2019), www. cbo. gov/Publication/55368.
24. For more information about how CBO predicts the corporate income tax revenue, "How Cbo Projects Corporate InCome Tax Revenures" (Octom 5, 2023), Publication/59436 I want to be referred.

The Labor Market

27. However, among the tax deductions that can be refunded, exceeding the taxpayer's duty of tax is exceptional, and the amount is recorded as an obligatory expenditure.

28. In this analysis, CBO adopted the tax spending of JCT as a deviation from the "normal" income tax structure. Regarding the personal income tax, the current regular tax rate, standard deduction, human deduction, and project expenses deduction are included. For corporate taxes, it is approved that it includes a statutory tax rate, generally defined income in pregnancy, and collects costs according to a specific depreciation system that is disadvantageous than the current law. For more information, the Budget Bureau, How Specifications of the Reference Tax System Affect CBO'S Estimates of Tax EXPENDITURES (December 2021), ON/57543; and tax joint committee, Estimates of Federal Tax EXPENDITURES FISCAL YEARS 2023-2027, JCX-59-23 (Decementer 2023), www. jct. gov/publications/2023/jcx-59-23. The Ministry of Finance's definition of tax expenditure is almost the same as the definition of JCT. See the Analytical Perspective (Office of Management and Budget): Office of Management and Budget Of THE U. S. Government, Fiscal Year 2024 (MARCH 2023), pp. 203-235 , www. govinfo. gov/app/details/budget-2024-perer.

29. Unlike JCT, CBO estimated the largest salary tax expenditure. According to the definition of CBO, the normal salary tax system includes the current salary tax rate applied to a widespread reward consisting of cash and fringed benefits. Tax expenditures that reduce the taxation basis of salary tax are reduced by reducing the income base used in the calculation of social security benefits.

30. Congress Budget Bureau, 2023 lon g-term budget outlook (June 2023), www. cbo. gov/Publication/59014.

Inflation

31. The evaluation of the accuracy of the CBO budget forecast is available in www. cbo. gov/topics/budget/acracy-projections. The latest data on the history of CBO predictions and actual results on deficit, debt, expenditure, and income is available on https: //github. com/us-cbo/eval-projections.

The federal budget projections described in Chapter 1 are based on recent economic trends and Congressional Budget Office projections. The U. S. economy grew in calendar year 2023 more than in 2022, albeit with a slowdown in inflation. In addition, the Federal Reserve raised the federal funds rate to its highest level since 2001. (This rate is what financial institutions charge each other for overnight loans of their foreign exchange reserves, and it affects interest rates throughout the economy.)

Economic growth is expected to slow in 2024, with rising unemployment and falling inflation. CBO expects the Federal Reserve to respond to slowing economic activity by lowering interest rates starting in the middle of the calendar year. Economic growth is expected to recover in 2025 and then moderate thereafter. CBO projects that the sharp increase in net migration rates that began in 2022 will continue through 2026. The increase in the number of people entering the United States minus the number of people leaving is projected to expand the workforce and boost economic growth.

CBO's economic projections reflect the state of the economy as of December 5, 2023, and assume that current laws governing federal taxes and spending will remain largely unchanged. The projections also factor in the impact of the Fiscal Responsibility Act of 2023 (Public Law 118-5), which limits funding for federal discretionary programs for the next two years, as discussed in Chapter 1.

Economic output, as measured by gross domestic product (GDP), is projected to grow 3. 1 percent in real terms (i. e., adjusted to remove the effects of inflation) in 2023. Real GDP growth is projected to slow to 1. 5 percent in 2024 due to slowing growth in personal consumption and declining investment in private nonresidential structures such as offices (see Figure 2-1). (Unless otherwise noted in this report, all annual growth rates are measured from the fourth quarter of one calendar year to the fourth quarter of the following year).

Interest Rates

Economic output growth is projected to slow in 2024 as consumer spending growth slows and business investment in nonresidential structures declines. Economic growth is projected to pick up in 2025 after the Federal Reserve cuts interest rates in response to worsening economic conditions in 2024.

Data source data source: US Council Budget Bureau, Economic Analysis Bureau. See www. cbo. gov/publication/59710#data.

Real GDP is a nominal GDP adjusted to remove the effects of price fluctuations. The growth rate of real GDP is measured from the fourth quarter of the calendar year to the fourth quarter of the following year.

Income

The numbers from 2000 to 2023 reflect data available from the Economic Analysis Bureau as of late January 2024. These data include values in the 4th quarter of 2023, which was not available at the time of CBO creation of the current prediction.

GDP = Gross domestic product.

The real GDP growth rate is expected to rise to 2. 2%in 2025 after the Federal Preparatory System Board (FRB) responded to the deterioration of economic conditions due to a reduction in interest rates in mi d-2024. The CBO predicts that the growth in 2025 will be supported by the increase in economic activities in departments that are susceptible to interest rates such as housing investment and personal consumption. The CBO also predicts that the hig h-pure immigration rate up to 2026 will support economic growth and add about 0. 2 % points to the annual growth rate of real GDP from 2024 to 2034.

Comparison With Other Economic Projections

Since 2026, CBO's real GDP predictions are mainly influenced by the prediction of real potential GDP (the maximum production of the economy). The CBO expects a real GDP growth rate from 2027 to 2034 to an average of 2. 0 % per year, which is the same as the average of the latent GDP growth in the past 20 years.

The Blue Chip Forecasts

It is expected that if economic growth slowed in 2024, the demand for labor will soften and the growth of salary employment (the number of employees included in corporate salary calculation) will slow down. The unemployment rate in the fourth quarter of 2023 was 3. 7%, but it was expected to increase to 4. 4%in the fourth quarter of 2024 and then an average of 4. 4%from 2025 to 2034 (Table 2-1). reference). The labor population is expected to continue to increase at a gentle pace until 2026, but this is due to the continuation of hig h-rate pure immigrants, which increases labor demand and the average age of population (called aging). This is because the decrease in the labor population is expected to be more than offsetting the decrease in the labor population caused by.

Figure 2-8.

Comparison of CBO’s Economic Forecasts With Those of the Blue Chip Forecasters

Data source data source: US Council Budget Bureau, Economic Analysis Bureau, Labor Statistics Bureau, Federal Reserve Council. See www. cbo. gov/publication/59710#data.

The 2023 values reflect data available from the Bureau of Economic Analysis and the Bureau of Labor Statistics as of late January 2024. These data include values for the fourth quarter of 2023 that were not available when CBO prepared its current projections.

GDP = gross domestic product; PCE = personal consumption expenditures.

a. Real values are nominal values adjusted to remove the effects of price fluctuations.

b. Excludes food and energy prices.

The Survey of Professional Forecasters

c. Consumer Price Index for all urban consumers.

Figure 2-9.

Comparison of CBO’s Economic Forecasts With Those in the Survey of Professional Forecasters

d. Employment cost index for wages and salaries of private sector workers.

e. Average monthly change is calculated as the net change in nonfarm payroll employment from the fourth quarter of one calendar year to the fourth quarter of the following year divided by 12.

f. Values for the fourth quarter of 2028.

g. Values for the fourth quarter of 2034.

h. The median interest rate that financial institutions charge each other for overnight loans of their foreign exchange reserves.

i. Adjusted to exclude the effects of tax rules on depreciation reserves and inflationary effects on inventory values.

The Federal Reserve

j. Estimates for 2023.

Figure 2-10.

Comparison of CBO’s Economic Forecasts With Those of the Federal Reserve

k. Represents net exports of goods and services, net capital income, and net immigration payments between the United States and the rest of the world.

Annual inflation is expected to slow further in 2024, roughly consistent with the Federal Reserve's (FRB) long-run goal of 2 percent. CBO projects that inflation, as measured by the personal consumption expenditures price index (PCE), the Fed's preferred measure of inflation, will decline to 2. 1 percent in 2024 from 2. 9 percent in 2023, reflecting softening labor demand and slowing rent growth. Inflation is projected to rise to 2. 2 percent in 2025, as factors that have held back food and energy price increases recede and stronger economic activity puts modest upward pressure on the prices of some services. CBO projects inflation to decline to 2. 1% in 2026, then average 2. 0% per year through 2034.

GDP = gross domestic product,*= 0. 05 % of GDP.

Data Source US Congress Budget Bureau. See www. cbo. gov/publication/59710#data.

It is expected that employee compensation will slow down from 2024 to 2034 due to softening labor demand. During this time, GDP is expected to grow more slowly than the reward. As a result, the ratio of labor income to GDP will rise from 55. 9%at the end of 2023 to 57. 0%at the end of 2027, and will generally remain flat.

It is expected that domestic corporate profits, which have been rising in recent years, will grow gently than GDP from 2024 to 2027 due to interest payments and increased employee fees. As a result, domestic corporate profits will decrease from 9. 8 % in the end of 2023 to 9. 2 % at the end of 2027, and thereafter, the GDP ratio is expected to be almost stable.

GDP = gross domestic product,*= 0. 05 % of GDP.

Lon g-term interest rates such as 1 0-year government bond interest rates are usually higher than shor t-term interest rates. Not so in early 2024, but the CBO predicts that the 1 0-year interest rate will rise compared to shor t-term interest rates, and the spreads of both will gradually return to the lon g-term average. It is expected that the 1 0-year interest rate, which was 4. 4%in the fourth quarter of 2023, will rise to 4. 8%in the fourth quarter of 2024 and to fall to 3. 7%in the fourth quarter of 2026. It is expected that the 1 0-year interest rate will gradually increase, and will be 4. 1%in 2034.

CBO formulates predictions to be located in the middle of the scope of the resulting results under the current law. These predictions are very uncertain, and many factors can have different consequences. Its uncertainties arise not only from abroad but also from various domestic factors. Shor t-term interest rates are stable until the first quarter of 2024, gradually decreasing until mi d-2027, and will be almost stable. The CBO responds to the federal preparation system (Fed), maintaining the Federal Fund interest rate between 5. 25 % and 5. 50 % until the first quarter of 2024, and increasing the unemployment rate in 2024. They expect to start reducing the interest rate in two quarters. One Federal Fund interest rate will decrease to 2. 9%by the middle of 2027, and will be almost flat afterwards. The thre e-month government bond interest rate is expected to follow similar routes.

In the short term, personal consumption, inflation, interest rates, etc. are the main factors of uncertainty. Personal consumption can grow at a pace that exceeds the expected CBO, leading to the strength of economic growth. In addition, inflation rate may decrease at a pace that exceeds the expected CBO, which may affect the prospects for interest rates and income growth. Not only shor t-term prospects, but important uncertainties in the economy include the progress of technology, the strength of US and foreign investors on the Ministry of Finance securities, and the US population size.

The real GDP in 2023 exceeded the forecast of February 2023, which CBO announced the economic forecast for the last 11 years. Because 2 CBO expected, personal consumption, corporate investment, and exports have grown in a steady increase. be.

CBO is currently predicted the average economic growth rate from 2024 to 2027 than last February (2. 0 % to 2. 4 % per year). This is mainly because the growth of economic sector, which is susceptible to interest rates, such as personal consumption, investment, and pure exports. The downward revision of the economic growth rate due to an increase in predictive interest rates is partly offset by an increase in economic activity due to an increase in predictive pure immigrants from 2024 to 2027. The real GDP growth rate from 2028 to 2033 is expected to exceed the CBO forecast (2. 0 % per year) in February last year.

The CBO reduced the forecast of the average unemployment rate between 2024 and 2027 (from 4. 7 % to 4. 3 %), as the economic growth rate in 2023 exceeded expected. The unemployment rate in the fourth quarter of 2023 was lower than the CBO predicted in February last year. It is expected that the unemployment rate will rise in 2024 due to the economic deceleration, but on average it is expected to be lower than the previous CBO prediction. Since 2027, CBO's unemployment rate is almost the same as last February.

The average labor rate from 2024 to 2033 is expected to be higher than last February (62. 0 % against 61. 7 %). This rise has also due to the CBO upwards the prediction of pure immigrants from 2022 to 2026. In the short term, personal consumption, inflation, interest rates, etc. are the main factors of uncertainty. Personal consumption can grow at a pace that exceeds the expected CBO, leading to the strength of economic growth. In addition, inflation rate may decrease at a pace that exceeds the expected CBO, which may affect the prospects for interest rates and income growth. Not only shor t-term prospects, but important uncertainties in the economy include the progress of technology, the strength of US and foreign investors on the Ministry of Finance securities, and the US population size.

Chapter 3: Changes in CBO’s Baseline Projections Since May 2023

Overview

The average labor rate from 2024 to 2033 is expected to be higher than last February (62. 0 % against 61. 7 %). This rise has also due to the CBO upwards the prediction of pure immigrants from 2022 to 2026. In the short term, personal consumption, inflation, interest rates, etc. are the main factors of uncertainty. Personal consumption can grow at a pace that exceeds the expected CBO, leading to the strength of economic growth. In addition, inflation rate may decrease at a pace that exceeds the expected CBO, which may affect the prospects for interest rates and income growth. Not only shor t-term prospects, but important uncertainties in the economy include the progress of technology, the strength of US and foreign investors on the Ministry of Finance securities, and the US population size.

Figure 3-1.

Changes in CBO’s Baseline Projections of the 10-Year Deficit Since May 2023

See the diagram of box 2-1.

The average labor rate from 2024 to 2033 is expected to be higher than last February (62. 0 % against 61. 7 %). This rise has also due to the CBO upgrading the prediction of pure immigrants from 2022 to 2026.

CBO's current inflation predictions may be lower or higher than the forecasts for February 2023, and are different. The price increase rate in 2023 was lower than the CBO's expectation, despite the stronger economic growth than expected. The inflation rate in 2024 is expected to be slightly lower than what CBO expected last February. Regarding 2025, the CBO reduced the prediction of the inflation rate measured by the growth rate of the PCE price index, but predicts the growth rate of the total city consumer price index (CPI-u), which is another indicator of the inflation rate. Is pulled up a little. The reason for this is that CPI-U is increasing the specific gravity of housing expenses than the PCE price index, and the cost of housing in 2025 is faster, so it has risen than the previous expected forecast. I expect it.

The shor t-term interest rate in 2024 and 2025 is expected to rise more than the CBO forecast last February. The change reflects that the Federal Reserve Council (Fed) has raised the target range of Federal fund interest rates than the CBO expectation, as the economic activity in 2023 exceeded expectations. After 2027, shor t-term and lon g-term interest rates are expected to be slightly higher than expected.
The forecast of name labor income from 2024 to 2027 has not changed since February last year. The CBO has increased labor income predictions after 2027, mainly due to an increase in employment forecasts. This change is consistent with recent corrections of past profits by the Economic Analysis Bureau (BEA).
The prediction of the real GDP growth rate of CBO is almost the same as the predictive forecasts. The forecast of 1 0-year government bond interest rates in the next year and a half is higher than most other predictions. CBO's current inflation predictions may be lower or higher than the forecasts in February 2023, and may be different. The price increase rate in 2023 was lower than the CBO's expectation, despite the stronger economic growth than expected. The inflation rate in 2024 is expected to be slightly lower than what CBO expected last February. Regarding 2025, the CBO reduced the prediction of the inflation rate measured by the growth rate of the PCE price index, but predicts the growth rate of the total city consumer price index (CPI-u), which is another indicator of the inflation rate. Is pulled up a little. The reason for this is that CPI-U is increasing the specific gravity of housing expenses than the PCE price index, and the cost of housing in 2025 is faster, so it has risen than the previous expected forecast. I expect it.

The shor t-term interest rate in 2024 and 2025 is expected to rise more than the CBO forecast last February. The change reflects that the Federal Reserve Council (Fed) has raised the target range of Federal fund interest rates than the CBO expectation, as the economic activity in 2023 exceeded expectations. After 2027, shor t-term and lon g-term interest rates are expected to be slightly higher than expected.

The forecast of name labor income from 2024 to 2027 has not changed since February last year. The CBO has increased labor income predictions after 2027, mainly due to an increase in employment forecasts. This change is consistent with recent corrections of past profits by the Economic Analysis Bureau (BEA).
The prediction of the real GDP growth rate of CBO is almost the same as the predictive forecasts. The forecast of 1 0-year government bond interest rates in the next year and a half is higher than most other predictions. CBO's current inflation predictions may be lower or higher than the forecasts for February 2023, and are different. The price increase rate in 2023 was lower than the CBO's expectation, despite the stronger economic growth than expected. The inflation rate in 2024 is expected to be slightly lower than what CBO expected last February. Regarding 2025, the CBO reduced the prediction of the inflation rate measured by the growth rate of the PCE price index, but predicts the growth rate of the total city consumer price index (CPI-u), which is another indicator of the inflation rate. Is pulled up a little. The reason for this is that CPI-U is increasing the specific gravity of housing expenses than the PCE price index, and the cost of housing in 2025 is faster, so it has risen than the previous expected forecast. I expect it.
The shor t-term interest rate in 2024 and 2025 is expected to rise more than the CBO forecast last February. The change reflects that the Federal Reserve Council (Fed) has raised the target range of Federal fund interest rates than the CBO expectation, as the economic activity in 2023 exceeded expectations. After 2027, shor t-term and lon g-term interest rates are expected to be slightly higher than expected.

The forecast of name labor income from 2024 to 2027 has not changed since February last year. The CBO has increased labor income predictions after 2027, mainly due to an increase in employment forecasts. This change is consistent with recent corrections of past profits by the Economic Analysis Bureau (BEA).

Legislative Changes

The prediction of the real GDP growth rate of CBO is almost the same as the predictive forecasts. The forecast of 1 0-year government bond interest rates in the next year and a half is higher than most other predictions.

Table 3-1.

Changes in CBO’s Baseline Projections of the Deficit Since May 2023

See the diagram of box 2-1.

Labor demand remained strong for much of 2023, while labor supply increased steadily. Nonfarm payrolls increased by more than 229, 000 jobs per month in 2023, about 4. 7 million (about 3%) above the pre-pandemic peak in February 2020. Despite the employment increase, the unemployment rate rose slightly in 2023, from 3. 5% at the end of 2022 to 3. 7% in December 2023. 3

The labor force participation rate increased overall in 2023, mainly due to strong growth in the participation rate of workers ages 25 to 54. Labor force participation rates for these age groups are now above their pre-pandemic peaks. Labor force participation rates for those 55 and older have not fully recovered from their large declines at the start of the pandemic.

Total nonfarm payrolls in 2023 were about 1. 3 million higher than CBO projected for that year in January 2020, just before the pandemic. This higher-than-expected employment was driven by a stronger population growth, higher prime-age labor force participation rates, and lower unemployment rates than CBO projected in January 2020.

Changes in Outlays

Although the inflation rate in 2023 slowed significantly, it was less than 2 %, a lon g-term target of the Federal Reserve (Fed). The inflation rate measured by the growth of the PCE price index fell from 5. 9%in 2022 to 2. 7%in 2023, and the annual growth rate of CPI-U fell from 7. 1%to 3. 2%. On the other hand, the average PCE inflation rate from 2010 to 2019 was 1. 5 % a year and the average CPI-U inflation rate was 1. 7 %. Most of the significant rising prices in 2023 were concentrated in the service department, and many goods were only a small increase. The PCE price index in 2023 was flat, but the service index rose 4. 1%.

Several factors that inspired inflation in 2022, including pressure on supply chains and soaring housing prices, were alleviated in 2023. In the first half of 2023, the PCE price index was led by a significant increase in shelter services, shelters and no n-energy services, and automotive prices, an average of 3. 3%. 4 In the latter half of 2023, the price of cars and various services increased, and the PCE inflation rate dropped to an average of 2. 1%.

With a higher inflation rate than lon g-term targets, the Federal Reserve Council (Fed) increased Federal Fund interest rates from 4. 5%in the first quarter of 2023 to 5. 3%in the second half. As a result, the Federal Fund interest rate in December 2023 has maintained a high level since February 2001.

The 1 0-year government bond interest rate rose from 3. 8 % in the fourth quarter of 2022 to an average of 4. 4 % in the fourth quarter of 2023. The interest rate fluctuated significantly in 2023, rising from an average of 3. 5%in April to an average of 4. 8%in October, and average in December to 4. 0%.

In the CBO prediction, the real GDP will grow slightly this year and will grow even more powerfully next year, on the premise that the current law that stipulates federal tax and federal expenditure will not be changed. After 2025, the growth of real GDP will be stable at the same rate as the growth of the potential production (the amount of real GDP that can be produced when the work and capital are employed at the maximum sustainable rate).

Specifically, it is expected that the growth of real GDP, which was 3. 1 % in 2023, will slow down to 1. 5 % in 2024 due to weak growth in investment by consumers and governments and corporate expenditures and corporate investment. See 2). In 2025, it is expected that personal consumption and investment growth will increase and economic growth will rise to 2. 2%. This growth greatly reflects the stimulus effect due to interest rates and the enhancement of the growth potential of housing investment expected from high pure immigration rates (see the Enficter Article 2-1). The CBO predicts that the hig h-pure immigration rate, which began in 2022, lasted to 2026, and the annual growth rate of real GDP between 2024 and 2034 would be about 0. 2 % points. From 2026 to 2034, the real GDP is expected to grow 2. 0 % per year, almost consistent with the growth of total supply (total economic production capacity, which depends on the supply of labor, capital, and technology).

Data source data source: US Council Budget Bureau, Economic Analysis Bureau. See www. cbo. gov/publication/59710#data.

Changes in Revenues

The real value is the name value adjusted to remove the effects of price fluctuations.

Economic Changes

The data is annual. The increase and decrease is the period from the fourth quarter of the calendar year to the fourth quarter of the following year.

Changes in Outlays

The value of 2023 reflects data available from the Economic Analysis Bureau as of January 2024. These data include values in the 4th quarter of 2023, which was not available at the time of CBO creation of the current prediction.

GDP = Gross domestic product, between* = -0. 05%points from 0. 05%points.

a. Purchase of equipment, no n-resident structures, and intellectual property products.

Figure 3-2.

Key Changes in CBO’s Economic Forecast Since February 2023

See the diagram of box 2-1.

c. Based on national income and product accounts.

d. Increase or decrease in private inventory. Specifically, it is expected that the growth of real GDP, which was 3. 1 % in 2023, will slow down to 1. 5 % in 2024 due to its weak growth in investment by consumers and governments and corporate expenditures. See Table 2-2). In 2025, it is expected that personal consumption and investment will increase, and the economic growth rate will rise to 2. 2%. This growth greatly reflects the stimulus effect due to interest rates and the enhancement of the growth potential of housing investment expected from high pure immigration rates (see the Enficter Article 2-1). The CBO predicts that the hig h-pure immigration rate, which began in 2022, lasted to 2026, and the annual growth rate of real GDP between 2024 and 2034 would be about 0. 2 % points. From 2026 to 2034, the real GDP is expected to grow 2. 0 % per year, almost consistent with the growth of total supply (total economic production capacity, which depends on the supply of labor, capital, and technology).

Data source data source: US Council Budget Bureau, Economic Analysis Bureau. See www. cbo. gov/publication/59710#data.

The real value is the name value adjusted to remove the effects of price fluctuations.

The data is annual. The increase and decrease is the period from the fourth quarter of the calendar year to the fourth quarter of the following year.

GDP = Gross domestic product, between* = -0. 05%points from 0. 05%points.

a. Purchase of equipment, no n-resident structures, and intellectual property products.

b. Detached housing, apartments, manufacturing housing, dormitory construction costs, housing renovation costs, and ownership transfer costs.

Changes in Revenues

c. Based on national income and product accounts.

d. Increase or decrease in private inventory. Specifically, it is expected that the growth of real GDP, which was 3. 1 % in 2023, will slow down to 1. 5 % in 2024 due to weak growth in investment by consumers and governments and corporate expenditures and corporate investment. See 2). In 2025, it is expected that personal consumption and investment will increase, and the economic growth rate will rise to 2. 2%. This growth greatly reflects the stimulus effect due to interest rates and the enhancement of the growth potential of housing investment expected from high pure immigration rates (see the Enclose article 2-1). The CBO predicts that the hig h-pure immigration rate, which began in 2022, lasted to 2026, and the annual growth rate of real GDP between 2024 and 2034 would be an average of about 0. 2 %. From 2026 to 2034, the real GDP is expected to grow 2. 0 % per year, almost consistent with the growth of total supply (total economic production capacity, which depends on the supply of labor, capital, and technology).

Data source data source: US Council Budget Bureau, Economic Analysis Bureau. See www. cbo. gov/publication/59710#data.

The real value is the name value adjusted to remove the effects of price fluctuations.

The data is annual. The increase and decrease is the period from the fourth quarter of the calendar year to the fourth quarter of the following year.

GDP = Gross domestic product, between* = -0. 05%points from 0. 05%points.

a. Purchase of equipment, no n-resident structures, and intellectual property products.

Technical Changes

b. Detached housing, apartments, manufacturing housing, dormitory construction costs, housing renovation costs, and ownership transfer costs.

c. Based on national income and product accounts.

Changes in Outlays

d. Increase or decrease in private inventory.

The size and age structure of the US population is an important factor in the US Congress Budget Bureau's economic forecast. CBO is currently expected to have a population of the next 10 years than last year's forecast, and is expected to concentrate on the population between the ages of 16 and 54. This is due to the increase in predictions of the number of people who leave the United States, and the prediction of mortality has declined.

Figure 3-3.

Key Changes in CBO’s Technical Projections Since May 2023

See the diagram of box 2-1.

Most of the expected population increase reflects the increase in pure immigrants. From 2024 to 2034, the growth rate of the national gross domestic product (GDP) will be raised by 0. 2 % points per year and the real GDP in 2034 will be increased by about 2 %. Predicted. However, in the CBO evaluation, the increase in immigration has reduced the real GDP per person in 2034 by 0. 8 %.

Real GDP growth averages 2. 2% per year from 2025 through 2028.

Changes in CBO population predictions affect economic activity prediction by increasing overall demand for goods and services, expanding labor, and changing productivity. The population growth is gently lower pressure on the total element productivity (TFP) in the short term, but after 2027, the TFP is expected to have a gentle rising pressure 2. 2 CBO also has a population increase. In the short term, it is presumed that the average real wage will apply lower pressure. This effect is partially reversed since 2027, but the average real wage up to 2034 is expected to be slightly lower than if it is not.

Most of the expected population increase reflects the increase in pure immigrants. From 2024 to 2034, the growth rate of the country's real gross domestic product (GDP) will be raised by 0. 2 % average, and the real GDP in 2034 will increase by about 2 %. Predicted. However, in CBO's evaluation, the increase in immigrants has reduced the real GDP per person in 2034 by 0. 8 %.

The CBO is now expected to increase 7. 4 million (2. 6 %) of the citizen population of 16 years or older in 2033 than conventional predictions. Most of this increase (5. 9 million) is due to the net increase of those who migrate to the United States. The rest are due to a decline in mortality due to a decrease in the number of deaths due to COVID-19. The size and age structure of the US population is an important factor in the US Congress Budget Bureau's economic forecast. The CBO is currently expected to increase the population of the next 10 years than last year's forecasts and concentrate on the population of 16 to 54 years. One increase is the number of pure immigrants (the number of people migrated to the United States). This is due to the increase in predictions of the number of people who leave the United States, and the prediction of mortality has declined.

Box 3-1.

Technical Changes to CBO’s Baseline Projections to Account for Developments Affecting Energy-Related Tax Provisions

Most of the expected population increase reflects the increase in pure immigrants. From 2024 to 2034, the growth rate of the national gross domestic product (GDP) will be raised by 0. 2 % points per year and the real GDP in 2034 will be increased by about 2 %. Predicted. However, in CBO's evaluation, the increase in immigrants has reduced the real GDP per person in 2034 by 0. 8 %.

The foreigners added to CBO's current population projections due to net immigration are projected to make up a larger proportion of the population under 55 years of age than the overall U. S. population, for both men and women. CBO projects that 91% of the additional foreigners aged 16 and older who will immigrate to the U. S. between 2022 and 2034 will be under 55 years of age, compared with 62% of the total U. S. population over that period. These additional foreigners include those who entered the U. S. legally, exercising their parole rights, and those who entered illegally.

A growing population increases the demand for goods, services, and housing. It also expands the productive capacity of the economy, as the labor force grows. CBO's population projections increase personal consumption expenditures by about 2% (1. 4% of GDP) and housing investment (i. e., spending on home construction and home improvements) by about 10% (0. 4% of GDP) between 2027 and 2033.

Furthermore, a growing population also increases the supply of labor. CBO now expects the labor force to grow by 5. 2 million in 2033 over last year's projection (see figure). Most of this growth is due to the increase in foreign nationals in CBO's new population projections. The effect of adding foreign nationals to the labor force is slower than the effect of adding population, in part because it takes longer for them to obtain work authorization. The majority of this population is projected to obtain work authorization within six months of entering the United States, and a minority is projected to work without authorization.

The age composition of the growing foreign nationals will affect the change in the labor force. People aged 25 to 54 tend to participate in the labor force at higher rates than people in other age groups. Thus, the labor force is projected to increase by about 0. 9 million by 2033, driven by a larger share of younger workers aged 25 to 54 and 16 to 24, who will be in their prime working years over the next decade.

Increased immigration also affects the supply of goods and services by changing total factor productivity. CBO expects the projected increase in immigration to reduce TFP in the short run and increase it in later years.

The short-run effect reflects the expectation that a significant proportion of additional foreigners will initially work in relatively low-productivity sectors, such as services, and thus slightly reduce TFP. This effect is projected to partially reverse over time as immigrants assimilate into the labor market and acquire additional skills. In addition, CBO expects that about 2 percent of the additional foreigners will be highly skilled workers in science, technology, engineering, and mathematics fields. These immigrants are projected to increase total factor productivity through innovation. These positive effects on TFP are projected to outweigh the negative effects by 2027, with TFP in 2034 being about 0. 2 percent higher than it would have been otherwise.

The increase in net immigration is projected to affect average real wages through several channels. First, an increase in foreigners will push down average wages by forcing them to work in lower-wage sectors of the economy. Second, an expected increase in the number of workers will reduce the amount of capital (plants and machinery) per worker, also pushing down average real wages. These two effects are expected to be mitigated over time as workers' skills improve and additional capital is built. Third, the expected increase in total factor productivity is expected to put upward pressure on wages; this effect is expected to grow slowly over time. CBO estimates that by 2034, these three effects will combine to make average real wages somewhat lower than they would otherwise be. 1. Congressional Budget Office, Demographic Outlook: 2024 to 2054 (January 2024), www. cbo. gov/publication/59697 , and The Demographic Outlook: 2023 to 2053 (January 2023), www. cbo. gov/publication/58612 .

2. Total factor productivity is the average real output per unit of labor and capital services, excluding the effects of the business cycle. Real values are nominal values adjusted to remove the effects of price fluctuations.

CBO construcs economic forecasts by focusing on the economic interaction between general supply and demand (from personal consumption, corporate fixed investment, inventory investment, housing investment, government expenditure, pure export). There is. In the shor t-term economic forecast of CBO (generally for the next 2-5 years), the fluctuations of the real GDP are determined mainly by the movement of total demand, but that affects the cost of immigration, labor, and new investment. It is also affected by suppl y-related factors.

With the passage of time, companies have been able to respond to changes in demand and changes in suppl y-related factors by changing the amount of input into production. Therefore, the economic forecast for the CBO later reflects the factors that are mainly underlying the total supply, and determines the potential production. The evaluation of CBO's potential production is to predict the main production factors such as working hours, capital services (services provided by capital assets such as facilities, software, factories), and the introduction of technological innovation in the economy. Depends.

CBO's current economic forecasts reflect the initial predictions of the CBO on the laws enacted by December 5, 2023, and the impact of the Financial Liability Law. The CBO prediction also reflects the expiration of the temporary clause under the 2017 Tax Law (P. L. 115-97). This is until the end of 2026 until the end of 2025, which affects the personal income tax at the end of 2025 and the company's bonus depreciation clause (a company can immediately deduct a specific investment fee). It contains step abolition. It is expected that the expiration of these expenditures will increase the tax paid by individuals and corporations.

According to the CBO prediction, the real consumption expenditure increased by 1. 3 % in 2024, about half of the growth rate of last year, and recovers 1. 9 % in 2025. In 2026, the increase in personal income tax is scheduled, and the growth of real consumption spending will slow down to 1. 6 %. After that, from 2027 to 2034, the real personal consumption grew 2. 2 % a year, consistent with the latent growth of the year. CBO focuses on the interaction in the economy between general supplies and general demand (from personal consumption, corporate fixed investment, inventory investment, housing investment, government expenditure, pure export). It is built. In the shor t-term economic forecast of CBO (generally for the next 2-5 years), the fluctuations of the real GDP are determined mainly by the movement of total demand, but that affects the cost of immigration, labor, and new investment. It is also affected by suppl y-related factors.

With the passage of time, companies have been able to respond to changes in demand and changes in suppl y-related factors by changing the amount of input into production. Therefore, the economic forecast for the CBO later reflects the factors that are mainly underlying the total supply, and determines the potential production. The evaluation of CBO's potential production is to predict the main production factors such as working hours, capital services (services provided by capital assets such as equipment, software, factories), and the introduction of technological innovation in the economy. Depends.

Changes in Revenues

According to the CBO prediction, the real consumption expenditure increased by 1. 3 % in 2024, about half of the growth rate of last year, and recovers 1. 9 % in 2025. In 2026, the increase in personal income tax is scheduled, and the growth of real consumption spending will slow down to 1. 6 %. After that, from 2027 to 2034, the real personal consumption grew 2. 2 % a year, consistent with the latent growth of the year. CBO construcs economic forecasts by focusing on the economic interaction between general supply and demand (from personal consumption, corporate fixed investment, inventory investment, housing investment, government expenditure, pure export). There is. In the shor t-term economic forecast of CBO (generally for the next 2-5 years), the fluctuations of the real GDP are determined mainly by the movement of total demand, but that affects the cost of immigration, labor, and new investment. It is also affected by suppl y-related factors.

With the passage of time, companies have been able to respond to changes in demand and changes in suppl y-related factors by changing the amount of input into production. Therefore, the economic forecast for the CBO later reflects the factors that are mainly underlying the total supply, and determines the potential production. The evaluation of CBO's potential production is to predict the main production factors such as working hours, capital services (services provided by capital assets such as equipment, software, factories), and the introduction of technological innovation in the economy. Depends.

Credit conditions, including interest rates and lending standards, are expected to restrain consumer spending this year but boost it next year. In 2022 and 2023, consumer spending was partially insulated from rising interest rates as many people were able to draw down on savings accumulated during the pandemic. 5 Furthermore, the impact of tightening credit requirements in 2022 and 2023 was muted by consumers’ historically high average credit scores. However, by the end of 2023, total deposits at banks and other financial institutions had declined and consumer loan delinquencies had increased. In 2024, rising interest rates on credit cards and consumer goods, as well as tighter credit requirements for consumer loans, are expected to weigh down consumer spending. The resumption of student loan repayments in the second half of 2023 (after a pandemic-era pause) is also expected to dampen consumer spending growth in 2024. In 2025, lower interest rates are expected to boost consumer spending. Other important factors in CBO's 2024-2034 personal consumption projections include labor market conditions, taxes, and population growth. Unemployment is projected to rise in 2024 and 2025, weighing down personal consumption. And in 2026, personal income tax payments will increase as temporary provisions of the 2017 tax reform expire. On the other hand, high net immigration rates are projected to boost personal consumption (see Box 2-1).

Throughout the 2024-2034 period, CBO expects personal consumption to continue to shift from goods to services as people gradually return to pre-pandemic consumption patterns (see Figure 2-2). Before the coronavirus pandemic, spending on goods as a share of total consumption had been gradually declining. During the pandemic, the share of spending on goods as a share of personal consumption increased significantly as people reduced spending on interpersonal services. In 2023, that share dropped significantly. CBO projects that spending on goods will continue to decline as a share of total consumption after 2023, at first more rapidly and then more slowly. By 2030, the share of consumer spending devoted to goods will return to its pre-pandemic trend of slowly declining.

CBO expects the share of personal consumption devoted to goods to decline over the next few years as people gradually return to pre-pandemic consumption patterns.

Data source data source: US Council Budget Bureau, Economic Analysis Bureau. See www. cbo. gov/publication/59710#data.

Nominal personal consumption expenditures do not make adjustments to remove the effects of price fluctuations, but reflect prices at that point. The share of goods to be used for personal consumption spending is composed of durable consumer goods and no n-durable consumer goods.

The values from 2000 to 2023 reflect the data available from the Economic Analysis Bureau as of late January 2024. These data include the value of the 4th quarter of 2023, which was not available at the time of the CBO created this prediction.

CBO is a real compan y-fixed investment that is purchased from new facilities, no n-housing structures, and intellectual property products (such as software) by private companies and no n-profit organizations, and is suppressed by the rise in demand for corporate products and services. , In 2024, it expects to increase by 2. 0 %. Among them, real investment in no n-resident structures has surged to 2023 due to an increase in factories, but is expected to decrease this year due to high interest rates and declining demand for new offices. In contrast, real investment in equipment and intellectual property products is expected to increase this year.

According to CBO predictions, the growth of the entire corporate investment will recover after 2024. One of the reasons is that as inflation rates continue to decline, the Federal Reserve Council (Fed) is expected to continue to reduce the Federal Fund rate (FF interest rate). Nominal interest rates are expected to decrease more than inflation rate, and corporate real borrowing costs are expected to decrease. Another reason is that the growing demand for corporate products promotes the increase in production capacity. Furthermore, CBO anticipates that the percentage of corporate facilities in GDP will increase to the average of the past 20 years. According to CBO prediction, the growth rate of fixed investment in real companies from 2025 to 2027 is an average of 3. 3 %. After that, as the GDP growth rate approaches the potential GDP growth rate, the growth rate of real corporate fixed investment will slow down to an average of 2. 7%per year from 2028 to 2034. Data Source Data Source: US Congress Budget Bureau, Economic Analysis Bureau. See www. cbo. gov/publication/59710#data.

According to CBO predictions, the growth of the entire corporate investment will recover after 2024. One of the reasons is that as inflation rates continue to decline, the Federal Reserve Council (Fed) is expected to continue to reduce the Federal Fund rate (FF interest rate). Nominal interest rates are expected to decrease more than inflation rate, and corporate real borrowing costs are expected to decrease. Another reason is that the growing demand for corporate products promotes the increase in production capacity. Furthermore, CBO anticipates that the percentage of corporate facilities in GDP will increase to the average of the past 20 years. According to CBO prediction, the growth rate of fixed investment in real companies from 2025 to 2027 is an average of 3. 3 %. After that, as the GDP growth rate approaches the potential GDP growth rate, the growth rate of real corporate fixed investment will slow down to an average of 2. 7%per year from 2028 to 2034. Data source data source: US Council Budget Bureau, Economic Analysis Bureau. See www. cbo. gov/publication/59710#data.

The value from 2000 to 2023 reflects data available from the Economic Analysis Bureau as of late January 2024. These data include the value of the 4th quarter of 2023, which was not available at the time of the CBO created this prediction.

CBO expects that investment in real inventories (finished goods, work in process, raw materials and supplies) by businesses will have little effect on GDP growth in 2024, after subtracting 0. 3 percentage points from GDP growth in 2023 (see Table 2-2). In 2025, inventory investment is expected to increase as GDP growth accelerates.

CBO expects mortgage rates to remain high in 2024 compared to rates in the decade before the pandemic. Still, rapid population growth, pent-up demand, and a shortage of used homes will boost demand for new housing, and real housing investment is expected to increase by 5. 1% in 2024. CBO projects that annual growth in real housing investment will jump to an average of 10. 8% in 2025 and 2026, driven by lower mortgage rates and increased housing demand due to recent immigration.

Net immigration is projected to slow after 2024 but remain higher than in the 2010-2019 period. Because immigrants tend to initially live with family or friends and then gradually form their own households, CBO estimates that a higher share of immigrants from 2022 to 2026 will boost new home construction in the second half of the 2020s. CBO projects that housing starts (the number of new housing starts) will average 1. 7 million units per year from 2026 to 2029.

Home prices (as measured by the S& P CoreLogic Case-Shiller Home Price Index) will rise 9. 5% in 2020, 19. 0% in 2021, and 7. 5% in 2022, driven by rising demand for housing and limited inventory of existing homes for sale. CBO projects that home price growth will slow to 5. 6% in 2023 as rising mortgage rates and high home prices dampen demand. CBO expects home price growth to slow further over the next two years, to 4. 3% in 2024 and 2. 1% in 2025, before recovering in the following years.

Federal governments, state governments, and local governments have increased the total purchase of 4. 3 % in 2023. CBO predicts that if the current laws that stipulate the federal tax and expenditure are generally maintained, the purchase amount will increase by 0. 8 % in 2024. The growth of the federal government, which was 4. 0 % in 2023, is expected to slow down to 0. 1 % in 2024 due to the restrictions on discretionary funding enacted under the Financial Liability Law. This restriction, as described in Chapter 1, will be restricted in the next two years. Purchases by state and local governments are expected to grow rapidly than the federal government. Reasons for this include an increase in the infrastructure projects in and local and local governments (broadband Internet services, transportation, public transport, water supply systems, etc.), and the salaries of state and local governments are expected. Is listed.

According to the CBO prediction, the actual government purchase is 0. 6 % per year from 2025 to 2034. The federal government's purchased amount will increase 0. 4 % per year. Purchased by the state government and local governments, with the support of the Federal Government, such as educational subsidies under the 2021 US Relief Planning Law (P. L. 117-2) and infrastructure investment and employment law (P. L. 117-58). It increases significantly to an average of 0. 7%per year. These subsidies have begun in 2021, but they are expected to continue through the forecast period.

About This Document

The CBO predicts that the US trade deficit (US import and export gap) accounts for the GDP almost flat in 2024, slightly increasing in 2025, and gradually decreasing. The trade deficit in 2024 is 2. 8%compared to GDP, and is expected to be the same ratio as 2023. According to CBO, both exports and imports grow in a more solid pace in 2025, but import growth will slightly exceed the export, and the trade deficit will increase to 2. 9%of GDP. Federal government, state government, and local governments have grown 4. 3 % in 2023. CBO predicts that if the current laws that stipulate the federal tax and expenditure are generally maintained, the purchase amount will increase by 0. 8 % in 2024. The growth of the federal government, which was 4. 0 % in 2023, is expected to slow down to 0. 1 % in 2024 due to the restrictions on discretionary funding enacted under the Financial Liability Law. This restriction, as described in Chapter 1, will be restricted in the next two years. Purchases by state and local governments are expected to grow rapidly than the federal government. Reasons for this include an increase in the infrastructure projects in and local and local governments (broadband Internet services, transportation, public transport, water supply systems, etc.), and the salaries of state and local governments are expected. Is listed.

The CBO predicts that the US trade deficit (US import and export gap) accounts for the GDP almost flat in 2024, slightly increasing in 2025, and gradually decreasing. The trade deficit in 2024 is 2. 8%compared to GDP, and is expected to be the same ratio as 2023. According to CBO, both exports and imports grow in a more solid pace in 2025, but import growth will slightly exceed the export, and the trade deficit will increase to 2. 9%of GDP. Federal governments, state governments, and local governments have increased the total purchase of 4. 3 % in 2023. CBO predicts that if the current laws that stipulate the federal tax and expenditure are generally maintained, the purchase amount will increase by 0. 8 % in 2024. The growth of the federal government, which was 4. 0 % in 2023, is expected to slow down to 0. 1 % in 2024 due to the restrictions on discretionary funding enacted under the Financial Liability Law. This restriction, as described in Chapter 1, will be restricted in the next two years. Purchases by state and local governments are expected to grow rapidly than the federal government. Reasons for this include an increase in the infrastructure projects in and local and local governments (broadband Internet services, transportation, public transport, water supply systems, etc.), and the salaries of state and local governments are expected. Is listed.

Economic Projections

From 2026 through 2034, the trade deficit is projected to narrow gradually. This is primarily due to rising exports, supported by a weaker dollar and improved economic growth in the United States' major trading partners. During this period, nominal export growth is projected to average 4. 2 percent per year, and nominal import growth is projected to average 3. 9 percent per year, causing the trade deficit to decline from 2. 9 percent of GDP to 2. 6 percent.

Value of the Dollar. CBO's projections of export and import flows are influenced by its projections for the exchange rate value of the U. S. dollar. CBO projects that the exchange rate value of the dollar will remain broadly stable through 2023, before gradually declining from 2024 through 2034. 6 This projection reflects CBO's projections that interest rates in the United States' major trading partners will rise relative to the U. S.'s projected interest rates, causing the value of the dollar to fall against the currencies of those trading partners. CBO projects that the dollar will depreciate by about 13% between the first quarter of 2024 and the end of 2034.

Exports. Real exports are expected to grow by only 1. 6% this year, in part because of expected weakness in foreign economies, reducing international demand for U. S. goods and services. CBO projects that real economic output in major U. S. trading partners will grow by 1. 8% in 2024, after increasing by 2. 0% in 2023. 7 After 2024, as the pace of economic growth in other countries returns to pre-recession trends and a weaker dollar makes U. S. exports more competitive in international markets, CBO projects that real exports will grow at a more moderate rate, averaging about 2. 9% per year from 2025 to 2028.

Imports. Import growth was unusually weak in 2023 as U. S. consumers shifted spending from goods (many of which are produced overseas) to services (many of which are produced domestically). CBO projects that slower growth in private consumption and domestic investment will limit real import growth to 1. 4% in 2024. The following year, real import growth is projected to rise to 2. 8% as private consumption and investment growth strengthen. After 2025, CBO projects that real import growth will slow, averaging 2. 2% per year from 2026 to 2034.

The CBO's economic forecast for the next few years depends on the expected variable of the whole demand for goods and services, but the CBO forecasts for the remaining period between 2024 to 2034 are evaluated by major input to potential GDP. Basically determined by. These inputs include potential working population, the flow of productive services from the country's capital stock, and the potential productivity of labor and capital.

According to CBO prediction, the average potential GDP growth rate is 2. 2%a year from 2024 to 2028, slightly higher than the average growth rate since 2007, when the economic cycle peaked, and the year from 2029 to 2034. Average grows at 1. 9%(see Table 2-3). The highest potential GDP growth rate in the next five years is mainly due to the rapid increase in the work force, reflecting that the pure immigration rate from 2022 to 2026 has risen sharply compared to recent years. be. Since 2008, potential labor population has increased by 0. 6 % per year. The CBO predicts the growth of potential labor, 0. 4 % average from 2024 to 2028 and from 2029 to 2034. Potential labor productivity (a real potential GDP divided by potential labor) is expected to increase 1. 2 % per year from 2024 to 2028, and an average of 1. 5 % a year from 2029 to 2034. It is (see Figure 2-3).

Data Source US Congress Budget Bureau. See www. cbo. gov/publication/59710#data.

The real value is the name value adjusted to remove the effects of price fluctuations.

The table indicates the annual complex growth rate of the specific period. These rates are calculated from the fourth quarter of the year just before the period to the fourth quarter of the end of the period.

GDP = Gross domestic product.

a. The amount of real GDP that CBO can be produced when labor and capital are employed at the maximum sustainable rate.

B. B. B. The workforce population estimated by CBO when economic production and other major variables are the maximum sustainable values.

c. The ratio of real potential GDP and potential labor.

d. d. A service provided by capital goods (computers and other devices, etc.) that make up the actual introduction in the production process.

e. E. Average real production per unit, excluding the effects of economic circulation, combining labor and capital services.

Revenue Projections

f. The ratio of potential output to potential hours worked in the nonfarm sector.

Real potential GDP is projected to grow at an average annual rate of 2. 2 percent over the next five years, the fastest rate since the 2007-2009 recession. This rapid growth in potential GDP is due in large part to CBO's projections of a steep rise in net immigration and an increase in the labor force from 2022 to 2026.

Data Sources Data Source: Congressional Budget Office. See www. cbo. gov/publication/59710#data.

Real values are nominal values adjusted to remove the effects of price fluctuations.

Real potential GDP is CBO's estimate of the amount of real GDP that could be produced if labor and capital were employed at their maximum sustainable rates. Its growth is the sum of the growth in the potential labor force and potential labor productivity. Potential labor force is the size of the labor force that would be if economic production and other key variables were at their maximum sustainable levels, as estimated by the CBO. Potential labor force productivity is the ratio of real potential GDP to potential labor force.

Bars show average annual growth rates for a given period. These growth rates are calculated using calendar year data.

GDP = Gross Domestic Product.

Real GDP growth is projected to decline after 2025 and converge to real potential GDP growth. At the end of 2026, the output gap (the difference between actual and potential GDP, expressed as a percentage of potential GDP) will narrow t o-0. 5%. It will remain at this percentage thereafter, consistent with the long-run relationship between actual and potential output. From 2029 to 2034, real GDP growth is projected to average 1. 9% per year, which is the same as real potential GDP growth.

Approximately thre e-quarters of the US economy activities, and most of the rising productivity, are in the no n-agricultural sector. It is expected that the potential production of the department will grow at an average of 2. 3%per year from 2024 to 2034. Approximately 1. 1%of this growth rate is due to the growth of the potential full element productivity of the department (average real production per unit of labor and capital, excluding the effects of economic circulation). In addition, 0. 8 % points are due to the increase in capital services, and the remaining 0. 5 % points are due to the increase in potential working hours.

2024 In early 2024, the slowdown in economic growth decelerates the demand for workers, so that the status of the labor market is expected to soften for the time being. According to CBO predictions, employment growth will slow down to early 2024, unemployment rates will increase, and wages will slow down (see Figure 2-4). It is expected that the rapid increase in immigrants, which will begin in 2022 and will continue until 2026, will increase the working population through the entire period between 2024 and 2034. Due to aging, the ratio of labor population is expected to decrease to 2034. Since 2026, the labor market is gradually returned to the past lon g-term average potential GDP, and employment, nominal labor remuneration, and wage growth are expected to slow down over the next few years. It is expected that the unemployment rate will gradually increase from 2026 to 2030, and will drop slightly from 2034.

It is expected that the number of employees in 2024 will slow down in recent years, as economic growth has slowed down the demand for workers.

The slowdown in economic growth is expected to increase the unemployment rate until early 2025.

It is predicted that the growth of the nominal wages will slow down next year due to the decline in labor demand and the decrease in inflation rate. The wage increase rate will continue to decline slowly after 2024, but is expected to exceed the average of 2015-2019 until 2034.

Data Source US Council Budget Bureau; Labor Statistics Bureau. See www. cbo. gov/publication/59710#data. Approximately thre e-quarters of the US economy activity, and most of the rising productivity are in the no n-agricultural sector. It is expected that the potential production of the department will grow at an average of 2. 3%per year from 2024 to 2034. Approximately 1. 1%of this growth rate is due to the growth of the potential full element productivity of the department (average real production per unit of labor and capital, excluding the effects of economic circulation). In addition, 0. 8 % points are due to the increase in capital services, and the remaining 0. 5 % points are due to the increase in potential working hours.

It is expected that the number of employees in 2024 will slow down in recent years, as economic growth has slowed down the demand for workers.

The slowdown in economic growth is expected to increase the unemployment rate until early 2025.

Spending Projections

Data Source US Council Budget Bureau; Labor Statistics Bureau. See www. cbo. gov/publication/59710#data. Approximately thre e-quarters of the US economy activities, and most of the rising productivity, are in the no n-agricultural sector. It is expected that the potential production of the department will grow at an average of 2. 3%per year from 2024 to 2034. Approximately 1. 1%of this growth rate is due to the growth of the potential full element productivity of the department (average real production per unit of labor and capital, excluding the effects of economic circulation). In addition, 0. 8 % points are due to the increase in capital services, and the remaining 0. 5 % points are due to the increase in potential working hours.

Defense, International Affairs, and Veterans’ Affairs

It is expected that the number of employees in 2024 will slow down in recent years, as economic growth has slowed down the demand for workers.

The slowdown in economic growth is expected to increase the unemployment rate until early 2025.

Data Source US Council Budget Bureau; Labor Statistics Bureau. See www. cbo. gov/publication/59710#data.

The number of employees is a sole proprietor, individual household employees, no n-reward volunteers, farm employees, and the number of employment workers, excluding sel f-employed employees who are not incorporated. The average monthly increase and decrease in the number of employees is calculated by dividing the net increase or decrease in the number of no n-agricultural department employees from the fourth quarter of the year to the fourth quarter of the following year.

The unemployment rate is the percentage of those who are not employed but can work, and are expected to return from temporary dismissal. Unemployment rate data is the average for the fourth quarter.

Wages are measured using the employment cost index for wages and salary of workers of private companies. The annual wage growth is from the fourth quarter of a calendar year to the fourth quarter of the following year.

The numbers from 2000 to 2023 reflect data available from the Labor Statistics Bureau as of late January 2024. These data include values in the 4th quarter of 2023, which was not available at the time of CBO creation of the current prediction.

The prediction of CBOs on employment, unemployment, labor population, and time rewards from 2028 to 2034 reflects the evaluation of CBOs mainly on the performance of the whole economy and the impact of lon g-term population statistics. 。 It is expected that the population aging and pure immigrants will strongly affect the size and composition of the working population for the next few decades.

It is expected that the growth of real production will increase in the number of no n-agricultural department employees in 2024, as the slowdown in growth will increase in demand for workers. The CBO expects employment growth to increase in 2025 with the recovery of economic growth, but it will continue to grow slowly until 2027. According to CBO predictions, employment will be on an on average to an average monthly increase of 110, 000 per month until 2027.

Education, Finance, and Housing

It is expected that the growth of employment after 2027 will slow down over the next few years. According to the CBO prediction, the number of no n-agricultural sector employees will increase on an average of 501, 000 per month from 2028 to 2034. According to CBO predictions, the growth of the labor force in 2028-2034 has been slower than the last 20 years. The number of employees is the number of employees, individual household employees, no n-reward volunteers, farm employees, and no n-incorporated sel f-employed workers. The average monthly increase and decrease in the number of employees is calculated by dividing the net increase or decrease in the number of no n-agricultural department employees from the fourth quarter of the year to the fourth quarter of the following year.

The unemployment rate is the percentage of those who are not employed but can work, and are expected to return from temporary dismissal. Unemployment rate data is the average for the fourth quarter.

Wages are measured using the employment cost index for wages and salary of workers of private companies. Annual wage growth is from the fourth quarter of a calendar year to the fourth quarter of the following year.

The prediction of CBOs on employment, unemployment, labor population, and time rewards from 2028 to 2034 reflects the evaluation of CBOs mainly on the performance of the whole economy and the impact of lon g-term population statistics. 。 The population aging and pure immigrants are expected to have a strong effect on the size and composition of the working population for the next few decades.

It is expected that the growth of real production will increase in the number of no n-agricultural department employees in 2024, as the slowdown in growth will increase in demand for workers. The CBO expects employment growth to increase in 2025 with the recovery of economic growth, but it will continue to grow slowly until 2027. According to CBO prediction, employment will increase to 110, 000 per month until 2027.

It is expected that the growth of employment after 2027 will slow down over the next few years. According to the CBO prediction, the number of no n-agricultural sector employees will increase on an average of 501, 000 per month from 2028 to 2034. According to CBO predictions, the growth of the labor force in 2028-2034 has been slower than the last 20 years. The number of employees is a sole proprietor, individual household employees, no n-reward volunteers, farm employees, and the number of employment workers, excluding sel f-employed employees who are not incorporated. The average monthly increase and decrease in the number of employees is calculated by dividing the net increase or decrease in the number of no n-agricultural department employees from the fourth quarter of the year to the fourth quarter of the following year.

The unemployment rate is the percentage of the working population who is not working but can work, and is expected to return from a job seek or temporarily dismissal. Unemployment rate data is the average for the fourth quarter.

It is predicted that the growth of real production increases in reality to increase the demand of workers, and that the growth of no n-agricultural department employees will slow down in 2024. The CBO expects employment growth to increase in 2025 with the recovery of economic growth, but it will continue to grow slowly until 2027. According to CBO prediction, employment will increase to 110, 000 per month until 2027.

It is predicted that the unemployment rate and the number of unemployed people will increase until early 2025, reflecting the slowdown in economic growth. The unemployment rate in the fourth quarter of 2023 was 3. 7 %. According to CBO predictions, the unemployment rate rises to 4. 4%in early 2025. The number of unemployed will increase from 6. 3 million in the fourth quarter of 2023 to 7. 5 million in early 2025.

The unemployment rate is expected to fall slightly in the latter half of 2025 due to the rise in the GDP growth rate in the first half of 2025, but will increase to 4. 4%until 2027. According to CBO predictions, the unemployment rate will continue to rise to 2030 as GDP returns to the past relationship with the latent GDP. After reaching a peak at nearly 4. 5%at the end of 2030, the unemployment rate will decrease slightly until 2034. This consists of a decrease in the predicted no n-circulatory unemployment rate (unemployment rate caused by all factors except for changes in total demand) during this period. This decrease is reflected that the shift of labor composition for older workers whose unemployment rate tends to be low (in the event of a labor force) and lo w-educated workers, whose unemployment rate tends to be high. I'm doing it.

Health

According to CBO predictions, the labor population will continue to expand at a gentle pace until 2026. During this time, the population growth is mainly due to the increase in immigrants, and is more than offsetting the decrease in labor rate due to the slowdown of labor demand and aging. Most of the recent and future immigrants are expected to be the ages of the age of 25 to 54 (see the Side Article 2-1).

Although the recent and expected immigration participation rate is relatively high, CBO is expected to fall from 62. 7 % in 2023 to 62. 2 % in 2027 due to the aging population. There is. In addition, it is expected that some people will withdraw from the labor force due to the increase in tax rates since 2026 (after the 2017 tax reform of the tax reform of the tax reform in the 2017 tax reform expired at the end of 2025). Unemployment rate and unemployed number are expected to increase to early 2025, reflecting the slowdown in economic growth. The unemployment rate in the fourth quarter of 2023 was 3. 7 %. According to CBO predictions, the unemployment rate rises to 4. 4%in early 2025. The number of unemployed will increase from 6. 3 million in the fourth quarter of 2023 to 7. 5 million in early 2025.

Although the recent and expected immigration participation rate is relatively high, CBO is expected to fall from 62. 7 % in 2023 to 62. 2 % in 2027 due to the aging population. There is. In addition, it is expected that some people will withdraw from the labor force due to the increase in tax rates since 2026 (after the 2017 tax reform of the tax reform of the tax reform in the 2017 tax reform expired at the end of 2025). It is predicted that the unemployment rate and the number of unemployed people will increase until early 2025, reflecting the slowdown in economic growth. The unemployment rate in the fourth quarter of 2023 was 3. 7 %. According to CBO predictions, the unemployment rate rises to 4. 4%in early 2025. The number of unemployed will increase from 6. 3 million in the fourth quarter of 2023 to 7. 5 million in early 2025.

The unemployment rate is expected to fall slightly in the latter half of 2025 due to the rise in the GDP growth rate in the first half of 2025, but will increase to 4. 4%until 2027. According to CBO predictions, the unemployment rate will continue to rise to 2030 as GDP returns to the past relationship with the latent GDP. After reaching a peak at nearly 4. 5%at the end of 2030, the unemployment rate will decrease slightly until 2034. This is consistent with the decrease in the predicted no n-circulatory unemployment rate (unemployment rate caused by all factors except for the changes in total demand). This decrease is reflected that the shift of labor composition for older workers whose unemployment rate tends to be low (in the event of a labor force) and lo w-educated workers, whose unemployment rate tends to be high. I'm doing it.

Although the recent and promising immigration participation rate is relatively high, CBO is expected to fall from 62. 7 % in 2023 to 62. 2 % in 2027 due to the aging. There is. In addition, it is predicted that some people will leave the labor force after 2026 (after the 2017 tax reform of the personal income tax regulations expired at the end of 2025).

The CBO expects the labor ratio to continue to fall, and will be 61. 4 % at 62. 2 % at the end of 2027 to the end of 2034. This decline is mainly due to the aging of the population, especially the retirement of the baby boom generation. The potential labor force rate in 2034 fell from 62. 4 % in 2023 to 62. 1 % in 2027 and 61. 5 % in 2034.

According to the CBO prediction, the slowdown in labor demand and the decrease in inflation will suppress the growth of nominal wages. The CBO is expected to increase the employment cost index (indicators indicating the time for labor excluding fringe and benefits) to 3. 6 % in 2023 to 3. 6 % in 2024. I'm doing it. Wage growth will continue to slow down slowly until 2029, but it is expected to maintain a level of 2. 7 %, an annual average from 2015 to 2019 before the pandemic. The actual wage per hour in the no n-agricultural sector is useful as an indicator of the lon g-term tendency of labor costs, and the average growth rate from 2028 to 2034 is 2. 0%per year, with labor productivity in the department. It is expected to be close to the average growth rate.

According to the CBO prediction, inflation will continue to slow down in 2024, despite the fact that the unemployment rate is lower than the no n-circulating unemployment rate. It is expected that this year will be eased this year after the pandemic, which has a rapid growth that supply demand exceeding the supply. The inflation rate has been predicted that the inflation rate will decrease in 2024 to 2 %, a lon g-term goal of the Federal Reserve (Fed), slightly increased in 2025, and will decrease for several years. There is.

The shor t-term interest rate is expected to remain almost flat in early 2024 and decrease from the year to 2026. Lon g-term interest rates are expected to rise from early 2024 to the end of the year, and then decline slowly until 2026. From 2027 to 2034, shor t-term interest rates are almost flat, and lon g-term interest rates are expected to rise slowly. CBO anticipates that labor rates will continue to decline, and will be 61. 4 % from 62. 2 % at the end of 2027 to the end of 2034. This decline is mainly due to the aging of the population, especially the retirement of the baby boom generation. The potential labor force rate in 2034 fell from 62. 4 % in 2023 to 62. 1 % in 2027 and 61. 5 % in 2034.

The shor t-term interest rate is expected to remain almost flat in early 2024 and decrease from the year to 2026. Lon g-term interest rates are expected to rise from early 2024 to the end of the year, and then decline slowly until 2026. From 2027 to 2034, shor t-term interest rates are almost flat, and lon g-term interest rates are expected to rise slowly. The CBO expects the labor ratio to continue to fall, and will be 61. 4 % at 62. 2 % at the end of 2027 to the end of 2034. This decline is mainly due to the aging of the population, especially the retirement of the baby boom generation. The potential labor force rate in 2034 fell from 62. 4 % in 2023 to 62. 1 % in 2027 and 61. 5 % in 2034.

According to the CBO prediction, inflation will continue to slow down in 2024, despite the fact that the unemployment rate is lower than the no n-circulating unemployment rate. It is expected that this year will be eased this year after the pandemic, which has a rapid growth that supply demand exceeding the supply. The inflation rate declined to 2 %, the lon g-term goal of the Federal Reserve (Fed), in 2024, and the CBO predicted that it would slightly increase in 2025, and to decrease for several years. There is.

Disruptions in the supply of goods and services will continue to wane in 2024 and 2025, as will the effects of pandemic-related legislation on demand for goods and services. CBO projects inflation to slow in 2024 but remain higher than before the pandemic (see Figure 2-5, top). Growth in the PCE price index, the Federal Reserve's recommended measure of inflation, fell to 2. 7% last year. CBO projects PCE inflation to fall to 2. 1% in 2024 and rise slightly to 2. 2% in 2025. The core PCE price index, which excludes food and energy prices, rose 3. 2% in 2023. Growth is expected to slow over the next two years, to 2. 4% in 2024 and 2. 3% in 2025. CBO projects that overall price growth, as measured by the PCE price index, will decline in 2024 and 2025 from last year, but overall inflation will remain higher than it was before the pandemic.

The main reasons inflation is projected to be lower in 2024 and 2025 than in recent years include easing upward pressures on food, energy, and other commodity prices and slower growth in shelter services prices (due to rising interest rates).

Data Sources Data Source: Congressional Budget Office, Bureau of Economic Analysis. See www. cbo. gov/publication/59710#data.

Headline inflation is the growth rate of the PCE price index, while core inflation excludes food and energy prices. Inflation is measured from the fourth quarter of one calendar year to the fourth quarter of the following year.

The values in the lower bar chart show the contribution of each category of goods and services to the growth rate of the PCE price index in percentage points. The sum of the contributions of these categories equals the overall growth rate of the PCE price index. Values for 2000-2018 and 2026-2034 are annual averages for those periods.

Values for 2000-2023 reflect data available from the Bureau of Economic Analysis as of late January 2024. These data include values for the fourth quarter of 2023, which were not available when CBO prepared its current projections.

PCE = personal consumption expenditures.

a. Core durable and nondurable goods (including automobiles and parts, electronics, home furnishings, and clothing).

b. The flow of housing services that housing provides to its occupants.

Income Security

c. Services other than shelter services such as medical services, transportation and recreational services.

There are three main reasons expected that inflation rate in 2024 will decrease. First, the CBO anticipates that the supply chain will almost recover from pandemic issues, and the effect of recovery will alleviate the rise in product prices this year (see Figure 2-5, lower). Second, the slowdown in economic growth and the rise in unemployment rate expected in 2024 will lower prices by reducing demand and wage growth. Third, the CBO predicts that the rise in lon g-term interest rates in 2024 will drop pressure on certain types of prices such as shelter services, automobiles and furniture. The rapid growth of shelter prices begins to alleviate in late 2023.

Even if the core PCE inflation rate decreases, the overall PCE inflation rate in 2025 is expected to rise. This is because the factors that have suppressed the price increase in food and energy (items not included in the core PCE index) are expected to retreat. In addition, the activation of economic activity is expected to increase the price rise pressure of some services (especially houses).

The overall and core inflation measured by the consumer price index of all cities consumers is expected to slow down on average in 2024 and 2025 than last year. The core CPI-U inflation is usually about 0. 3%higher than the core PCE inflation rate. However, the growth of the core CPI-U in 2023 exceeded the growth of the core PCE price index by 0. 8 points. Since 2025, CPI-U calculations have been reduced as the price increases in categories of goods and services that occupy larger weights and services, and the difference between these two inflation has been reduced, and it is smaller than the past average. I expect it to be. C. Services other than shelter services such as medical services, transportation and recreational services.

The overall and core inflation measured by the consumer price index of all cities consumers is expected to slow down on average in 2024 and 2025 than last year. The core CPI-U inflation is usually about 0. 3%higher than the core PCE inflation rate. However, the growth of the core CPI-U in 2023 exceeded the growth of the core PCE price index by 0. 8 points. Since 2025, CPI-U calculations have been reduced as the price increases in categories of goods and services that occupy larger weights and services, and the difference between these two inflation has been reduced, and it is smaller than the past average. I expect it to be. c. Services other than shelter services such as medical services, transportation and recreational services.

Natural and Physical Resources

The PCE inflation rate from 2026 to 2028 is expected to gradually decrease due to the slowdown in economic growth and the increase in interest rates. These factors not only reduce the demand for goods and services, but also affect inflation rate by reducing labor demand, increasing the unemployment rate. The CBO expects unemployment rate to exceed the no n-circulating unemployment rate on average from 2026 to 2028. It is expected that if the unemployment rate rises in comparison with the no n-circulating unemployment rate, reducing the wage negotiations of workers and the expenditure of the household budget will be further reduced to the rise in wages and prices.

According to CBO forecast from 2028 to 2034, the average core PCE inflation rate is 2. 0 % and the entire PCE inflation rate is 1. 9 % per year. Both are close to the lon g-term goal of the Federal Preparatory System (Fed). The annual average growth rate of CPI-U is 2. 2%, which is the average difference between CPI-U and PCE inflation between 2000 and 2015, and the Federal Reserve Council (Fed) for the PCE inflation rate. It matches lon g-term goals.

The CBO anticipates that the Federal Reserve Council (Fed) will continue to maintain Federal fund interest rates between 5. 25 % and 5. 50 % until the first quarter of 2024. Financial tightening policies, which are reflected in high real interest rates, will suppress economic activity and continue to reduce inflation pressure. High real interest rates reduce the growth of personal consumption by increasing the cost of procurement of purchase funds (especially large items such as houses and cars). In addition, by increasing borrowing costs for companies to expand their production capabilities, the growth of corporate investment is suppressed. In addition, hig h-rates on mortgage loans suppress the growth of housing investment. The PCE inflation rate from 2026 to 2028 is expected to gradually decrease due to the slowdown in economic growth and the increase in interest rates. These factors not only reduce the demand for goods and services, but also affect inflation rate by reducing labor demand, increasing the unemployment rate. The CBO expects unemployment rate to exceed the no n-circulating unemployment rate on average from 2026 to 2028. It is expected that if the unemployment rate rises in comparison with the no n-circulating unemployment rate, reducing the wage negotiations of workers and the expenditure of the household budget will be further reduced to the rise in wages and prices.

The CBO anticipates that the Federal Reserve Council (Fed) will continue to maintain Federal fund interest rates between 5. 25 % and 5. 50 % until the first quarter of 2024. Financial tightening policies, which are reflected in high real interest rates, will suppress economic activity and continue to reduce inflation pressure. High real interest rates reduce the growth of personal consumption by increasing the cost of procurement of purchase funds (especially large items such as houses and cars). In addition, by increasing borrowing costs for companies to expand their production capabilities, the growth of corporate investment is suppressed. In addition, hig h-rates on mortgage loans suppress the growth of housing investment. The PCE inflation rate from 2026 to 2028 is expected to gradually decrease due to the slowdown in economic growth and the increase in interest rates. These factors not only reduce the demand for goods and services, but also affect inflation rate by reducing labor demand, increasing the unemployment rate. The CBO expects unemployment rate to exceed the no n-circulating unemployment rate on average from 2026 to 2028. It is expected that if the unemployment rate rises in comparison with the no n-circulating unemployment rate, reducing the wage negotiations of workers and the expenditure of the household budget will be further reduced to the rise in wages and prices.

As inflation rates have slowed down and the economy has been sluggish, the Federal Reserve Board (Fed) is expected to reduce Federal fund interest rates from the second quarter of this year. The CBO predicts that the Federal Reserve Council (Fed) will continue to reduce Federal Fund interest rates as inflation rates have fallen to 2%of the central bank's lon g-term goal of central banks. Federal fund interest rates were expected to fall to 2. 9%in mid-2027, slightly rose to 3. 0%in 2031, and then flattened (see Figure 2-6). It is expected that shor t-term government bond interest rates such as shor t-term securities for the goods will move almost in conjunction with the change in the target range of Federal fund interest rates of the Federal Reserve (Fed).

According to the CBO prediction, the Federal Reserve Council (Fed) will start reducing Federal Fund interest rates in the second quarter of 2024 in response to the slowdown in inflation and the rise in unemployment rates. From this year, the spread of Federal Fund interest rates and 1 0-year government bond interest rates is expected to gradually return to the lon g-term average.

Other Areas and Functions

Data source data source: US Council Budget Bureau, Federal Reserve Council. See www. cbo. gov/publication/59710#data.

The Federal Fund rate shown here is an effective Federal Fund rate, a median interest rate in which financial institutions impose each other in overnight loans for foreign currency preparation, and are average weight. The data is the average value for the fourth quarter.

The value of 2023 reflects interest rate data in December 2023. When the CBO created this prediction, this data was not available.

Lon g-term government bond interest rates are expected to rise in 2024, then decline from early 2025 to 2026, and later rising. According to CBO, the interest rate of 1 0-year government bonds, which had an average of 4. 4 % in the fourth quarter of 2023, rose to 4. 8 % in the fourth quarter of 2024. This rise is mainly the weakness of the labor market and the term premium (paid to bond holders to extra risks associated with lon g-term bond holding) due to the weakness of the labor market and the balance sheet of the Federal Reserve (FRB). It is due to the rise in the rise of the additional return). 8 Since 2024, lon g-term government bond interest rates are expected to decrease with shor t-term interest rates, but their width is not so large. It is expected that the interest rate of 1 0-year government bonds will decrease from 4. 8%in the fourth quarter of 2024 to 3. 7%in the fourth quarter of 2026.

CBO projects that from 2026 onwards, short-term and long-term Treasury bill interest rates will be higher than the average interest rates over the 10 years prior to the pandemic. Compared to that decade, real interest rates will rise because the federal debt will be larger and productivity will grow more rapidly. In addition, inflation is projected to be higher than before the pandemic, causing nominal interest rates to rise.

Economic activity and federal tax revenues depend on how total income in the economy is allocated between labor income, domestic corporate profits, personal income, interest and dividend income, and other categories. (Labor income includes wages and salaries, as well as other forms of compensation, such as employer-paid benefits and the portion of employer income that represents compensation for hours worked.) Because these incomes are taxed at higher rates than other incomes, the share of income attributable to salary income and domestic corporate profits is particularly important in projecting federal revenues.

Employee compensation growth is projected to slow from 2024 to 2027 due to a declining labor force, rising unemployment, and slowing wage growth. However, GDP is expected to grow more slowly than compensation over that period. As a result, labor income as a share of GDP is projected to rise from 55. 9% at the end of 2023 to 57. 0% at the end of 2027.

CBO's projections are consistent with past cyclical patterns for compensation as a share of GDP. When the economy slows, as in CBO's short-term projections, compensation growth tends to slower than other income growth. As a result, labor income as a share of GDP tends to rise, and other income as a share of GDP tends to fall during periods of slower GDP growth.

From 2028 to 2034, the ratio of labor income to GDP is expected to be stable, an average of 57. 1 %. This forecast is below 60. 4%, which is the average ratio of labor income in GDP from 1947 to 2000, but since 2000 has reduced the ratio of labor income for GDP. The factors are expected to last for the next 10 years. These factors include globalization, which tends to relocate the production of labo r-intensive goods and services to countries with low labor costs, and technological innovation that seems to increase the return to capital than returns to labor. Included.

According to CBO prediction, wages and salaries follow the same circulation pattern as the ratio of labor income to GDP. Wages and salaries, which reached 43. 1%of GDP at the end of 2023, were expected to rise to 43. 8%at the end of 2027, and that the percentage of GDP would be almost constant.

It is expected that the proportion of domestic corporate profits in GDP will decrease in the next 10 years, as interest payments and wage costs decrease the profit margin of companies. The CBO predicts that the interest payment and the increase in employee compensation will decrease from 9. 8 % in the end of 2023 to 9. 2 % at the end of 2023. From 2028 to 2034, the ratio of domestic corporate profits to GDP is expected to be relatively stable, an average of 9. 0 %, which is closer to the average for the past few decades.

CBO's economic forecasts include a lot of uncertainty in both shorts and thereafter. In the field of uncertainty, economic growth, labor market strength, prices and wages increase, credit status, asset prices, growth of productivity, interest rates and monetary policies, trends in the United States, and past laws. Includes the influence of. Other factors in uncertainty include rarely and difficult to predict, such as war, pandemic, natural disasters, and financial crisis.

CBO's base line forecast reflects the premise that current laws that stipulate federal tax and federal expenditures will be maintained. Although new laws that significantly change the federal tax and federal expenditure may be enacted, the following discussions are limited to other factors. From 2028 to 2034, the percentage of labor income in GDP is expected to be stable, an average of 57. 1 %. This forecast is below 60. 4%, which is the average ratio of labor income in GDP from 1947 to 2000, but since 2000 has reduced the ratio of labor income for GDP. The factors are expected to last for the next 10 years. These factors include globalization, which tends to relocate the production of labo r-intensive goods and services to countries with low labor costs, and technological innovation that seems to increase the return to capital than returns to labor. Included.

Long-Term Spending Projections

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CBO's base line forecast reflects the premise that current laws that stipulate federal tax and federal expenditures will be maintained. Although new laws that significantly change the federal tax and federal expenditure may be enacted, the following discussions are limited to other factors. From 2028 to 2034, the ratio of labor income to GDP is expected to be stable, an average of 57. 1 %. This forecast is below 60. 4%, which is the average ratio of labor income in GDP from 1947 to 2000, but since 2000 has reduced the ratio of labor income for GDP. The factors are expected to last for the next 10 years. These factors include globalization, which tends to relocate the production of labo r-intensive goods and services to countries with low labor costs, and technological innovation that seems to increase the return to capital than returns to labor. Included.

Elim Poon - Journalist, Creative Writer

Last modified: 27.08.2024

Is it time to start worrying about inflation again? We believe the short answer is likely no. Make no mistake, inflation ran hot in the first. A slowing global economy coupled with a divergent economic landscape will challenge the banking industry in new ways in Inflation returns to the spotlight this week when a key gauge is likely to show price growth slowed in April after several months of above-expected gains.

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