The U.S. economy will grow at a “solid” rate of 2.2% this year, the non-partisan Congressional Budget Office forecast on Tuesday, but with federal budget deficits hitting $1.015 trillion (772 billion pounds).
While the economy will be on good footing during this presidential election year, CBO also noted that conditions will lead to “higher inflation and interest rates after a decade in which both remained low, on average.”
The inflation and interest rate rises will be noticed this year and continue through 2022 before settling down beginning in 2023, under the forecast.
In its updated budget and economic outlook spanning the next decade, CBO said that consumer spending, spurred by rising wages and household wealth, will remain strong.
But federal deficits will average $1.3 trillion per year between 2021-2030 — a level that some economists fear is unsustainable.
CBO projections assume that current laws governing taxes and spending will generally remain unchanged.
Washington’s budget deficit hit $1.4 trillion in fiscal 2009, stemming from a severe economic recession that began two years earlier.
The massive budget deficits now being experienced and estimated to continue for years to come are under far better economic circumstances — a time when such deficits ought to be more under control, according to many economists and policymakers.