The Congressional Budget Office (CBO) has released a grim outlook for the US economy this year, predicting that the unemployment rate will soar to 5.1% and the publicly held US debt will near double to $46.4 trillion by 2033.
The CBO’s outlook includes high interest rates and inflation continuing to weigh on households and businesses, with jobs growth in 2023 estimated at just 108,000, a far cry from the 517,000 jobs added in January alone. It’s also possible that the US could hit its debt ceiling earlier than July if tax receipts don’t meet expected amounts.
The CBO expects yearly deficits to exceed $2.85 trillion in 2033, with the biggest drivers of rising debt in relation to GDP being increasing interest costs and spending for Medicare and Social Security.
This year, the CBO anticipates a slowdown in the US economy due to the Federal Reserve’s actions to reduce inflation by raising its benchmark interest rates. However, the office expects growth to pick up once the Fed has tamed inflation and pulled back on its benchmark rates.
Overall, the CBO’s outlook for the US economy this year is not encouraging. High levels of debt, inflation, and unemployment could create a difficult economic environment for households and businesses. It’s important that the Federal Reserve takes steps to reduce inflation and pull back on benchmark interest rates to help the US economy get back on track.