US Budget Projected At $1 Trillion In 2020, Will Average $1.3 Trillion Until 2030 - CBO

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US Budget Projected at $1 Trillion in 2020, Will Average $1.3 Trillion Until 2030 - CBO

WASHINGTON (UrduPoint News / Sputnik - 29th January, 2020) The US Federal budget deficit is projected to stand at $1 trillion this year and will average $1.3 trillion over the next decade, the Congressional Budget Office (CBO) said in an outlook.

"In CBO's projections, the federal budget deficit is $1.0 trillion in 2020 and averages $1.3 trillion between 2021 and 2030,"a summary of the agency's "Budget and Economic Outlook: 2020 to 2030" said on Tuesday.

The CBO is a federal agency within the legislative branch that provides budget and economic information to Congress.

The CBO said it projected the deficit to rise from 4.6 percent of gross domestic product (GDP) this year to 5.4 percent by 2030.

"Other than a six-year period during and immediately after World War II, the deficit over the past century has not exceeded 4.0 percent for more than five consecutive years," the CBO said. "And during the past 50 years, deficits have averaged 1.5 percent of GDP when the economy was relatively strong (as it is now).

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Because of the large deficits, the federal debt held by the public is projected to also increase from 81 percent of GDP in 2020 to 98 percent in 2030, marking the highest percentage growth of its kind since 1946, the CBO said.

By 2050, the debt is projected to be 180 percent of GDP - a level far higher than any time in history, the CBO warned.

The CBO also pointed out that inflation-adjusted GDP in 2020 is projected to grow by 2.2 percent, largely because of continued strength in consumer spending and a rebound in business fixed investment.

Output is also projected to be higher than the economy's maximum sustainable output this year, boosting inflation and interest rates, the CBO said.

Continued strength in the demand for labor will also keep the jobless rate low and drive employment and wages up, CBO said.

But all these will change after 2020, when economic growth is projected to slow to an annual average of 1.7 percent between 2021 and 2030, the CBO added.