This should concern all of us
Posted: Tue Jul 23, 2024 5:55 pm
From Jim Puplava, an EPG member:
Last month, the Congressional Budget Office (CBO) updated their Budget and Economic Outlook for 2024-2034, revealing some startling projections. The 2024 deficit estimate has increased by $400 billion, a 27% rise from their estimate five months ago. The deficit for 2024 is expected to be $2.0 trillion, which is 7% of our Gross Domestic Product (GDP). This is projected to be 6.5% of GDP in 2025, and then fall to 5.5% by 2027, only to rise again to 6.9% by 2034.
These numbers are alarming, especially considering that the budget deficit averaged 2.8% of GDP from 1970 through 2019. For the next decade, the deficit is expected to be double that half-century average. Disturbingly, these numbers may still be overly optimistic. The CBO forecasts no recession for the next decade, yet the U.S. has never gone 14 years without entering a recession. Recessions typically cause budget deficits to widen as revenues fall and expenditures rise. Furthermore, the CBO estimates that inflation will moderate to 2.2% over the next decade, and they predict long-term interest rates will peak at 4.5%, staying at or below 4% for the next decade. Given the current amount of government spending, these estimates for inflation and interest rates seem overly optimistic, if not downright delusional.
Last month, the Congressional Budget Office (CBO) updated their Budget and Economic Outlook for 2024-2034, revealing some startling projections. The 2024 deficit estimate has increased by $400 billion, a 27% rise from their estimate five months ago. The deficit for 2024 is expected to be $2.0 trillion, which is 7% of our Gross Domestic Product (GDP). This is projected to be 6.5% of GDP in 2025, and then fall to 5.5% by 2027, only to rise again to 6.9% by 2034.
These numbers are alarming, especially considering that the budget deficit averaged 2.8% of GDP from 1970 through 2019. For the next decade, the deficit is expected to be double that half-century average. Disturbingly, these numbers may still be overly optimistic. The CBO forecasts no recession for the next decade, yet the U.S. has never gone 14 years without entering a recession. Recessions typically cause budget deficits to widen as revenues fall and expenditures rise. Furthermore, the CBO estimates that inflation will moderate to 2.2% over the next decade, and they predict long-term interest rates will peak at 4.5%, staying at or below 4% for the next decade. Given the current amount of government spending, these estimates for inflation and interest rates seem overly optimistic, if not downright delusional.