CBO predicts continued growth for the US economy until next year
A new report from the Congressional Budget Office (CBO) projects continue growth in the economy for remainder of this year before slowing some time next year.
photo/Gerd Altmann
The updated economic outlook states that inflation adjusted or real gross domestic product (GDP) would grow 3.1 percent this year, exceeding 2.2 percent growth in 2017 due to lower income taxes, increased government spending and private investment.
The “Trump tax cuts” slashed corporate and personal income taxes in January in a $1.5 trillion package, but Congress passed a $1.3 trillion spending bill in March.
“There is an acceleration of growth that is significant,” said Allen Sinai, chief economist and strategist at Decision Economics. “A year or so ago, 3.1 percent in annual growth did not look doable. But it has happened.”
“In 2019, the pace of GDP growth slows to 2.4 percent in the agency’s forecast, as growth in business investment and government purchases slows,” CBO director Keith Hall said in a statement.
President Trump celebrated projections that the economy grew by about 4.2 percent this spring.
“You’re going through a nice sugar rush provided by the federal stimulus, which is going to slowly come back down next year,” said Satyam Panday, senior economist at S&P Global. “We’re seeing a near-term positive effect, but these policies are not going to have a big impact on the longer-run growth.”
“The increased demand for labor and competition for workers boost the growth of hourly labor compensation,” the CBO said.
The CBO’s analysis is similar to that of a number of independent firms and Wall Street analysts.
