THE BUDGET AND ECONOMIC OUTLOOK: 2014 TO 2024

Earlier today the Congressional Budget office issued its paper "The Budget and Economic Outlook: 2014 to 2024"

Among its key forecasts was this helpful summary:


"The Congressional Budget Office (CBO) projects that, under an assumption that current laws governing federal taxes and spending remain in place, economic activity will expand at a solid pace in 2014 and the next few years. Increases in housing construction and investment by businesses will boost overall output, employment, and incomes, and, therefore, consumer spending; in addition, federal fiscal policy will restrain the growth of the economy by much less than it has recently. As measured by the change from the fourth quarter of the previous year, real (inflation-adjusted) gross domestic product (GDP) is projected to increase by 3.1 percent this year and by 3.4 percent per year in 2015 and 2016; by comparison, real GDP increased by 2.7 percent in 2013.


Nevertheless, CBO estimates that the economy will continue to have considerable unused labor and capital resources—or “slack”—for the next few years. According to the agency’s projections, the unemployment rate will decline gradually but remain above 6.0 percent until late 2016. The labor force participation rate (the percentage of people in the civilian noninstitutionalized population age 16 or older who are either working or are available for and actively seeking work), which has been pushed down by an unusually large number of people deciding not to look for work because of a lack of job opportunities, will move only slowly back toward the level it would be without the cyclical weakness in the economy. The substantial amount of slack remaining in the labor market and elsewhere in the economy will help to keep the rate of inflation, as measured by the price index for personal consumption expenditures (PCE), below 2.0 percent during the next few years."


While not entirely joyful, it does envision relatively low inflation in the general economy and a modest rate of growth for the next few years.

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