The Congressional Budget Office (CBO), in its recently revised report, predicted slower U.S. economic growth and higher unemployment into next year.
The nonpartisan budget agency said on July 26 that economic and job growth in 2024 has so far been stronger than forecasted in February.
However, its updated forecast saw parts of the economy in decline through 2024.
The CBO’s latest 10-year budget and economic outlook, which assesses the future standing of the American economy, was put off guard by the pandemic.Many economists had expected that the Federal Reserve’s aggressive plan to raise interest rates to combat high inflation would have led to mass layoffs and a recession by now.
Instead, the U.S. economy has continued to grow and the labor market remains tight, while hiring is relatively solid.
Real adjusted economic growth for 2023 as a whole is expected to grow to 0.9 percent instead of 0.1 percent as forecast in February due to the stronger-than-expected labor market in the first half of 2023.
The CBO said it expects interest rates to continue to rise, while the gross domestic product (GDP) faces a slowdown in the latter half of the year.The CBO projects U.S. GDP growth in the latter half to slow to 0.4 percent, as consumer spending weakens and tighter lending standards reduce economic activity.
In 2024, GDP growth is expected to rebound as monetary policy eases, with real GDP increasing by 1.5 percent in 2024 and by 2.4 percent by 2025.
