Washington – The U.S. economy is recovering faster than expected from a pandemic downturn, and in part due to huge federal spending pushing budget deficits, to recoup all the work lost during the coronavirus by mid-July ‘next year. $ 3 trillion in fiscal 2021 Congressional budget office said Thursday.
New forecast incorporating $ 1.9 trillion stimulus package signed by President Biden in March has warned Republicans Some economists run away from inflation All of this spending can hurt the economy. Instead, the Bureau of Management has predicted that the recent surge in prices for cars, airline tickets and other commodities is temporary and will begin to decline this year.
Government officials downplayed the deficit forecast and instead focused on forecasting economic growth, with Biden’s strong numbers boosting the economy. Reinforce their views II Inflation poses little threat to the recovery.
The non-partisan budget office predicted that the economy would grow 6.7 percent per year, adjusted for inflation. This is the fastest annual growth rate in the United States since 1984. It’s significantly faster than what the Office of Management and the Biden administration each predicted this year.
Unemployment is also estimated at less than 4% next year and will remain historically low for the next several years, showing a significant acceleration in job growth from what the bureau predicted in February. The CBO then said the unemployment rate would not fall below 4% until 2026.
Officials at the Budget Office said the rise in growth and employment forecasts was mainly due to aggressive government stimulus measures. However, the economy also benefits consumers who quickly spend the savings they accumulated during the pandemic. Households were supported by multiple stimuli, including direct control passed under President Donald J. Trump, and a faster-than-expected economic recovery as vaccinations spread.
Mr Biden’s aide acknowledged many of these developments. They said the president’s promotion to speed up vaccine production and distribution helped the economy recover. In an interview with David Kamin, deputy director of the National Economic Council of the White House, Biden’s stimulus plan, the US Relief Plan, aims to accelerate the return to low unemployment and the Office of Management and Budget . He said the prediction was proof. It was successful.
“This report applies to the very theory of the case, why we pursued a bailout,” he said.
Government officials also announced the latest forecast from the International Monetary Fund. Posted Thursday afternoon Inflation-corrected growth forecast for the US economy of 7% in 2021. In April, the IMF forecasts annual growth in the US of 4.6%.
Biden’s stimulus package will bring the federal budget deficit closer to an all-time high this year, but ultimately keep the country in a slightly better financial position.
The spending Mr Biden approved is expected to increase the deficit for the 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 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 around 1%, the Bureau of Management said.
“Projected income for the next decade is now higher as the economy strengthens and taxable income increases accordingly,” the report said.
Biden’s bailout 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 in-depth coronavirus testing. It included hundreds of billions of dollars in direct payments to speed up. He also extended an additional federal payment of $ 300 per week to the unemployed until September. This is a benefit of the early termination of Republican governors across the country as employers complain that it is difficult to find workers.
The Bureau of Management said these benefits “weaken the supply of labor,” as well as concerns about workers’ health. He said expiring benefits would help reduce the risk of contracting the virus and spur job growth in the second half of this year.
Inflation, a hot topic in Washington, is expected to subside in the coming months. The Secretariat forecasts that inflation will exceed recent trends and reach 2.6% per year. It’s stronger than expected in February, but authorities expect these price pressures to ease in the second half of the year as various supply constraints are relaxed in areas such as: timber 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 shrink rapidly over the next several years. Management Office officials said this partly reflected the impact of more restrictive immigration policies adopted under Mr. Trump. By 2023, offices predict that growth will slow to 1.1%.
The forecast does not take into account any additional economic policies Mr Biden may adopt in the meantime. It is now helping to create jobs and foster growth by improving worker productivity and the economy in general, including repairing bridges to help more parents, especially women, and subsidizing child care costs. children. I urge Congress to approve the $ 4 trillion spending and the tax cuts I have aimed for, working overtime.
The Tax Hawks said the report’s long-term deficit forecast underscored the need for additional economic investment to be paid for in full and not covered by federal borrowing. Citizen debt has increased to approximately $ 36 trillion by 2031, which is currently forecast by the Bureau of Management and Budget. That’s slightly larger (just over 6%) than the size of the entire U.S. economy that year.
Maya MacGuineas, chair of the Federal Budget Committee responsible for Washington, said: From continuing to finance the deficit to paying things off, and ultimately reducing the national debt from where it is now. “
US deficit expected to reach $ 3 trillion in 2021, Office of Management says
Source link US Deficit Expected to Reach $ 3 Trillion in 2021, Office of Management Says