Ahead of the start of the year, the outlook for the U.S. economy has been hard hit by the collapse of global oil prices, as the federal government and the Trump administration have signaled they are moving toward a $1.5 trillion spending plan.
But with some indicators suggesting the economy will expand this year, analysts are now turning to the prospect of a $2 trillion deficit in the coming year.
The latest outlook, released Thursday by the Congressional Budget Office, says that over the next decade, the federal deficit will rise from $1 trillion to $2.2 trillion.
The CBO projects that the deficit will reach $1,638 billion in 2026, and $1 (2.1%) of that will come from the deficit from the federal budget.
That would be about a quarter of what the CBO projects it will end up with this year.
It also projects that in 2024, the deficit would rise from 2.7% of GDP to 3.3%.
The CBO also projects an increase in the federal debt of nearly $1tn over the following decade.
This is because the CBO is projecting that debt will grow by $1 and a half trillion over the period from 2020 to 2024.
It projects that if the budget surplus is equal to or greater than 2% of the economy’s gross domestic product, the CBO would also project that the federal deficits would shrink by about $1 or $2, depending on the assumptions that Congress makes about how long it takes to run a deficit.
The outlook is based on a baseline projection of $1 in 2018.
But the CBO doesn’t take into account any new revenue that Congress might raise, including tax cuts.
The deficit is projected to grow by about 0.5% of gross domestic output in 2027 and to grow about 1% of that total over the decade.
The $2 billion figure is more than double the $1 billion CBO had projected.
This means that, for the first time, the economy is projected not to grow as fast as it otherwise would.
The CBO now projects that over time, economic growth will be roughly 0.6%, about what it expected, but not nearly as fast or as quickly as economists would like.
A year ago, President Trump and House Speaker Paul Ryan were forecasting an economic expansion of 3% or more over the year.
But over the past few weeks, the president has been less optimistic, warning that deficits will continue to grow and that the economy would have to be “run into the ground” to avoid a recession.
In a speech on Friday, he said, “I believe we are going to have a recession, and it’s going to happen, but I’m not going to call it a recession.”
Trump has said he thinks the federal economy could run into a recession if Congress doesn’t provide spending cuts.