U.S. budget deficits are set to widen further in coming years and economic gains will be “muted,” according to the Congressional Budget Office’s latest forecast, a growth outlook that’s weaker than the Trump administration’s target of at least 3 percent growth.
However, the budget deficit is expected to hit $1 trillion two years later than previously projected, the non-partisan arm of Congress projected.
The economy is forecast to slow over the next three years with the growth rate easing to 2.3 percent in 2019, 1.7 percent next year, and 1.6 percent in 2021, CBO said in its annual forecast on Monday. Growth was an estimated 3.1 percent last year.
“The slowdown begins in 2019 as the positive effects of recent tax legislation on business investment are expected to wane and federal purchases under current law are projected to drop sharply starting in the fourth quarter of this year,” according to the report.
The U.S. budget deficit is forecast to widen to $897 billion over the 12 months through September, from $779 billion last year. The CBO said the U.S. budget deficit will top $1 trillion in fiscal 2022, two years later than its forecast in April.
“That reduction in projected deficits results primarily from legislative changes — most notably a decrease in emergency spending,” the CBO said.
Still, the U.S. debt burden will keep rising, the group said. “Because of persistently large deficits, federal debt held by the public is projected to grow steadily, reaching 93 percent of GDP in 2029 — it’s highest level since just after World War II.”