The Congressional Budget Office (CBO) released its updated economic projections for 2023-2025, predicting inflation to approach the Federal Reserve’s target of 2% by 2024. The report, titled “Current View of the Economy from 2023 to 2025,” forecasts a slowdown in overall economic growth and an increase in unemployment into 2025.
Key projections include:
- The unemployment rate rising to 4.4% in the fourth quarter of 2024, staying near that level through 2025.
- Gross Domestic Product (GDP) growth slowing from 2.5% in 2023 to 1.5% in 2024, before rebounding to 2.2% in 2025.
- Compared to its February 2023 projections, the CBO now expects weaker growth, lower unemployment, and higher interest rates in 2024 and 2025.
The CBO’s outlook contrasts with the current state of the U.S. economy, where the unemployment rate has been below 4% for almost two years, the longest such period since the late 1960s. Despite the prediction of rising unemployment, the actual hiring pace this year differs significantly.
Regarding inflation, most economists anticipate a decline as growth slows. This week, the Federal Reserve maintained its key interest rate, signaling potential rate cuts by next summer. Federal Reserve Chair Jerome Powell indicated that rate increases might cease due to the steady cooling of inflation.
CBO Director Phillip Swagel emphasized that the report offers objective analysis without policy recommendations, adhering to the agency’s mandate for impartiality.
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