President Biden will turn over a slowing economy and a tepidly rising unemployment rate to President-elect Donald Trump, the Congressional Budget Office said Wednesday, describing the headwinds the new administration will face.
The good news is that inflation will be tamed, falling to the target level of 2% by 2027, CBO said. Interest rates will also fall, the analysts said.
“CBO expects the slowdown in economic growth and the rise in unemployment to lessen the demand for goods and services and contribute to a downward movement in inflation over the next three years,” CBO said.
By the numbers, the analysts said growth of real gross domestic product will slow from 2.3% this year to 1.9% next year and slip further to 1.8% in 2026 and 2027.
The economy, which added 185,000 jobs a month this year, will slip to around 50,000 jobs by 2026 and 2027. The unemployment rate will tick up from 4.2% to 4.4% by 2026.
But the personal consumption price index, a basic measure of inflation, will drop from 2.5% now to 2% by 2027. That’s the target rate the central bank aims to achieve for a strong economy.
Mr. Biden oversaw a massive spending spree, part of which was paid for by tax increases and a more aggressive IRS.
Total federal debt has passed $36.2 trillion, up $8.4 trillion when Mr. Trump left office in 2021.
The future looks just as grim.
Uncle Sam ran a deficit of more than $600 billion in October and November alone, with spending coming in 18% higher than the same period in 2023 and revenue 7% lower.
The spending increases were largely fueled by rising Social Security and Medicaid payments.
Mr. Trump, during the campaign, promised trillions of dollars worth of new tax breaks compared to existing law. That includes extending his 2017 tax cuts, as well as a series of new cuts.
He has also promised major spending cuts and assigned Elon Musk and Vivek Ramaswamy to identify areas of action.
• Stephen Dinan can be reached at sdinan@washingtontimes.com.
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