The U.S. deficit is expected to reach $ 3 trillion in 2021, the Office of Management said

Washington — The US economy is recovering faster than expected from a pandemic downturn, and partly due to huge federal spending pushing up budget deficits, to regain all the work lost during the coronavirus by mid-next year It’s going well. $ 3 trillion in fiscal year 2021 Congressional Budget Office said Thursday..

New forecasts incorporating a $ 1.9 trillion stimulus package signed by President Biden in March warned Republicans Some economists It Runaway inflation All that spending can hurt the economy. Instead, the Office of Management predicted that the recent surge in prices for cars, airline tickets and other products is temporary and will begin to recede this year.

Government officials downplayed deficit forecasts and instead focused on forecasting economic growth, with strong numbers Biden stimulating the economy. Strengthen their views It Inflation poses little threat To recovery.

The nonpartisan budget bureau predicted that the economy would grow 6.7% annually, adjusted for inflation. This is the fastest annual growth rate in the United States since 1984. This is significantly faster than the Office of Management and the Biden administration each predicted this year.

Unemployment is also estimated to be below 4% next year and will remain historically low for the next few years, demonstrating a significant acceleration in employment growth from what the office predicted in February. The CBO then said the unemployment rate would not fall below 4% until 2026.

Budget Office officials said the rise in growth and employment forecasts was primarily due to aggressive government stimulus. However, the economy also benefits from consumers who are rapidly spending the savings they have accumulated during the pandemic. Households were supported by multiple stimuli, including a direct check passed under President Donald J. Trump, and a faster economic recovery than expected as vaccinations spread.

Mr Biden’s aide acknowledged many of these developments. They said the president’s promotion to accelerate vaccine production and distribution helped the economy resume. In an interview with David Kamin, Deputy Director of the White House National Economic Council, Biden’s stimulus package, the US Relief Plan, aims to drive a faster return to low unemployment and the Office of Management and Budget. Said that the prediction was evidence. It was successful.

“This report applies to the very theory of the case, why we pursued a rescue plan,” he said.

Government officials have also foretold the latest forecasts from the International Monetary Fund. Released on Thursday afternoonPredicted inflation-adjusted growth in the US economy by 7% in 2021. In April, the IMF forecasts annual growth in the United States of 4.6%.

Biden’s stimulus package will bring the federal budget deficit closer to a record high this year, but will eventually keep the country in a slightly better financial position.

Spending approved by Mr. Biden is projected to increase the deficit for the fiscal year ending September by $ 1.1 trillion. The total deficit of $ 3 trillion will nominally be the second largest economic share since 1945, after fiscal year 2020.

However, the increase in growth associated with this year’s larger deficit will slightly improve the fiscal outlook for the next decade, reducing the total deficit by about 1 percent, the Office of Management said.

“Forecast revenues for the next decade are now higher as the economy becomes stronger and taxable income increases as a result,” the report said.

Biden’s bailout plan includes $ 1,400 each for low- and middle-income Americans, $ 350 billion to help states and local governments fix what they expect to be under budget, vaccines and more extensive coronavirus testing. It included hundreds of billions of dollars in direct payments to accelerate. It also extended an additional federal payment of $ 300 a week to the unemployed until September. This is an advantage of the early termination of Republican governors across the country as employers complain that it is difficult to find workers.

The Office of Management said these benefits “weaken the supply of the workforce,” along with concerns about the health of workers. He said the expiration of the benefits would help reduce the risk of getting the virus and boost employment growth in the second half of this year.

Inflation, a hot topic in Washington, is projected to ease in the coming months. The Secretariat predicts that inflation will outpace recent trends and reach 2.6% annually. This is stronger than expected in February, but authorities expect these price pressures to ease in the second half as various supply constraints are eased in areas such as: Wood and cars.

Predictors predict that economic growth will continue at a strong pace in 2022, reaching 5% in real terms. However, they expect the workforce to grow more slowly than usual and will decline rapidly over the next few years. Office of Management officials said it partially reflected the impact of the more restrictive immigration policies adopted under Mr. Trump. By 2023, offices forecast growth to slow to 1.1 percent.

The forecast does not take into account any additional economic policies that Mr. Biden may enact in the meantime. He is now helping to create jobs and help growth by improving worker productivity and the wider economy, including repairing bridges to help more parents, especially women, and subsidizing childcare costs. I’m urging Congress to approve the $ 4 trillion spending and tax cuts I’ve aimed at, working additional hours.

Fiscal hawks said the report’s long-term deficit forecast emphasized the need for additional economic investment to be fully paid and not covered by federal borrowing. Citizens’ debt has increased to about $ 36 trillion by 2031, which the Office of Management and Budget currently forecasts. That’s slightly larger (a little over 6%) than the size of the entire US economy that year.

Maya MacGuineas, chairman of Washington’s Responsible Federal Budget Committee, said: From further deficit finance to payment of things, and ultimately to reducing national debt from the current path. “

The U.S. deficit is expected to reach $ 3 trillion in 2021, the Office of Management said

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