Source: Glonui.
It is expected that this year's economic growth will accelerate and inflation will rise.
On Tuesday, the Congressional Budget Office (CBO) raised its forecast for the US budget deficit this year by 27% to nearly $2 trillion, sounding a new warning for the federal government's debt.
The total deficit over the next decade will be $22.1 trillion.
The Congressional Budget Office expects the deficit to reach $1.92 trillion in 2024, up more than $400 billion from the February forecast and higher than the $1.69 trillion in 2023.
The increased part of the deficit estimate reflects additional spending, including aid to Ukraine and the Biden administration's student loan forgiveness measures.
In terms of the proportion of GDP, the CBO expects the US deficit to expand rather than shrink in fiscal year 2024, which ends in September this year, with an estimated ratio of 6.7%. The previous forecast in February was 5.3%, and the forecast for 2023 was 6.3%.
In contrast, the EU guideline is to keep the deficit at or below 3%.
"From 2024 to 2034, the total deficit each year will be equal to or exceed 5.5% of GDP at least. Deficits have never remained at such high levels for more than five consecutive years since at least 1930," said the Congressional Budget Office in the new forecast.
Against the backdrop of high US interest rates, the interest costs of debt are also huge. The CBO forecast continues to show that the ratio of US debt to GDP will reach a record high, and interest costs will continue to rise, with interest costs exceeding defense spending this year.
The Congressional Budget Office expects the total deficit in the United States over the next 10 years to reach $22.1 trillion, more than $2 trillion higher than in February.
The Federal Reserve is expected to start cutting interest rates next year.
In addition, in supporting economic forecasts for the fiscal outlook, the CBO expects economic growth to accelerate this year and inflation to rise.
The CBO expects GDP in the fourth quarter of 2024 to grow by 2% compared to the same period in 2023, higher than the February forecast of 1.5%. The inflation rate is expected to be 2.7% measured by personal consumption expenditure (PCE), while the February forecast was 2.1%.
The CBO also predicts that the Federal Reserve will delay interest rate cuts until the first quarter of 2025 and that the benchmark interest rate will fall to 3% by the end of 2028 and remain stable thereafter. The timing forecast in February was mid-2024.
The median estimate of Fed officials for long-term interest rates is 2.8%, and the current interest rate is between 5.25% and 5.5%.
It should be noted that the economic forecast of the Congressional Budget Office was completed before the most recent meeting of the Federal Reserve in early May.
Editor / ruby