US economy

The U.S. budget deficit is projected to fall to $1 trillion in 2022.

WASHINGTON — The federal budget deficit is projected to decline sharply this year as spending on pandemic aid programs subsides and the economy continues to expand, the nonpartisan Congressional Budget Office said in new forecasts released on Wednesday.

The United States is expected to record a $1 trillion budget shortfall this year, down from $2.7 trillion in 2021, marking a return to the economy’s prepandemic trajectory. The C.B.O. expects inflation to moderate this year from last year, but to remain elevated, and said economic growth will be sluggish over the next two years.

The projections come at a time of great uncertainty for the United States economy, with the Federal Reserve raising interest rates to tame high levels of inflation and supply chains still disrupted, a result of the pandemic and the war in Ukraine. The future of President Biden’s economic agenda is also in limbo, with Democrats hoping to pass new legislation ahead of the November midterm elections. Most of their ambitions for major investments have been stalled amid political gridlock.

Despite the deficit decline, the C.B.O. said that debt remains a long-term problem for the United States. By 2032, debt held by the public is projected to reach 110 percent of gross domestic product, a record high, and the cost of interest on the debt is expected to double as a share of the economy.

“Rapidly growing deficits as far as the eye can see are not good for wages, economic growth or our ability to invest in the future for the next generation,” said Michael A. Peterson, the chief executive officer of the Peter G. Peterson Foundation, which promotes deficit reduction.


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