The Congressional Budget Office said Friday it expects inflation to nearly hit the Federal Reserve’s 2% target rate in 2024, as overall growth is expected to slow and unemployment is expected to rise into 2025, according to updated economic projections for the next two years.
Quick Read
- Inflation Projection: The CBO expects inflation to nearly reach the Federal Reserve’s target rate of 2% in 2024.
- Economic Growth and Unemployment Outlook: Overall economic growth is anticipated to slow, and unemployment is expected to rise into 2025. The unemployment rate is projected to hit 4.4% in the fourth quarter of 2024 and stay around that level through 2025.
- Current Unemployment Rate: As of the latest data from the Bureau of Labor Statistics, the current unemployment rate stands at 3.7%.
- Gross Domestic Product (GDP) Estimates: The CBO estimates that the GDP growth will decrease from 2.5% in 2023 to 1.5% in 2024, before rebounding to 2.2% in 2025.
- Comparison with Previous Projections: The new projections indicate weaker growth, lower unemployment, and higher interest rates for 2024 and 2025 compared to the CBO’s forecasts in February 2023.
- Employment Trends vs. Forecasts: Despite the forecast of rising unemployment, the jobless rate has remained below 4% for nearly two years, the longest streak since the late 1960s.
- Economists’ Views on Inflation and Growth: Most economists expect economic growth to slow and inflation to continue declining.
- Federal Reserve’s Interest Rate Policy: The Federal Reserve has kept its key interest rate unchanged for the third consecutive time, with indications of a possible rate cut as early as next summer.
- Federal Reserve Chair’s Comments: Jerome Powell, the Federal Reserve Chair, suggested that officials might be done raising rates, citing the steady cooling of inflation.
- CBO Report’s Nature: The CBO report provides an objective and impartial analysis without making any policy recommendations, as stated by CBO director Phillip Swagel.
The Associated Press has the story:
Congressional Budget Office projects lower inflation, higher unemployment into 2025
Newslooks- WASHINGTON (AP)
The Congressional Budget Office said Friday it expects inflation to nearly hit the Federal Reserve’s 2% target rate in 2024, as overall growth is expected to slow and unemployment is expected to rise into 2025, according to updated economic projections for the next two years.
The office’s Current View of the Economy from 2023 to 2025 report estimates that the unemployment rate will hit 4.4% in the fourth quarter of 2024 and remain close to that level through 2025.
Currently, the unemployment rate is 3.7%, according to the latest Bureau of Labor Statistics data.
Meanwhile, gross domestic product, otherwise known as the overall health of the economy, is estimated to fall from 2.5% in 2023 to 1.5% in 2024 — then rebound to 2.2% in 2025, according to the CBO projections.
Compared with its February 2023 projections, CBO’s Friday report predicts weaker growth, lower unemployment, and higher interest rates in 2024 and 2025.
But in a reminder that the U.S. economy has seldom behaved as anticipated through the pandemic and its aftermath, the employment forecast looks very different from the pace of hiring so far this year.
The jobless rate has now remained below 4% for nearly two years, the longest such streak since the late 1960s.
And on the inflation front, most economists expect growth to slow and inflation to continue to decline.
This week, the Federal Reserve kept its key interest rate unchanged for a third straight time, and its officials signaled that they are edging closer to cutting rates as early as next summer.
At a news conference, Federal Reserve Chair Jerome Powell said that officials are likely done raising rates because of how steadily inflation has cooled.
In keeping with the agency’s mandate to provide objective, impartial analysis, the report makes no policy recommendations, CBO director Phillip Swagel said in the report.
