Econintersect: The Congressional Budget Office (CBO) has released its latest fiscal outlook report covering the years 2013-2023. The new projections have the the federal deficit falling well under $1 trillion in 2013 (for the first time in five years) and to 2.4% of GDP by 2015. The deficit peaked at more than 10% of GDP in 2009. In 2012 the ratio was 7%; for 2013 the projection is 5.2%.
One of the key assumptions of the outlook is that the GDP gap will be closed in five years after continued slow GDP growth in 2013.
Click on graphic for larger image.
Another key assumption is that unemployment will drop below 6% in three years and drop slowly toward 5% (but not reach it) from 2016 to 2023.
Another set of assumptions regarding economic growth are reflected in the GDP chart. It is assumed that there will a couple of years with GDP growth greater than 4% within 3-4 years and average 3.7% for the four years 2015-2018.
It is clear that the CBO is not including a recession before 2023 in the projections. If that were to happen it would mean that by June 2023 the U.S. would have experienced 24 years without a recession. That would more than twice as long as any time between recessions in the entire history of the country. The longest recession-free interval until now was 11 years from March 1991 to March 2001.
Another GEI News article has additional graphics from the CBO report and extensive excerpts.
- The Budget and Economic Outlook: Fiscal Years 2013 to 2023 (Full Report, Congressional Budget Office, 05 February 2013)
- The Budget and Economic Outlook: Fiscal Years 2013 to 2023 (Summary, Congressional Budget Office, 05 February 2013)
- US Gross Domestic Product GDP History (US Government Spending.com)