The Congressional Budget Office yesterday issued its latest economic outline, as of August 2009, as a pdf document. The CBO forecasts have been respected, traditionally, as accurate, non-partisan forecasts. They estimate both annual federal deficits, overall public debt, and unemployment to continue to rise in the near term, with annual federal deficits (and thus overall public debt) continuing for years beyond.
Here’s an excerpt from the report:
The Congressional Budget Office (CBO) estimates that the federal budget deficit for 2009 will total $1.6 trillion, which, at 11.2 percent of gross domestic product (GDP), will be the highest since World War II. That deficit figure results from a combination of weak revenues and elevated spending associated with the economic downturn and financial turmoil. The deficit has been boosted by various federal policies implemented in response, including the stimulus legislation and aid for the financial, housing, and automotive sectors.
Although various indicators suggest that the recession may have ended or is likely to end within the next few months, CBO’s economic forecast anticipates a relatively slow and tentative recovery. A number of forces, including global economic weakness, continued strains in financial markets, and households’ desire to rebuild their savings, are expected to restrain economic growth for the next few years.
CBO estimates that, as the economy recovers, if current laws and policies remained in place, the deficit would shrink but remain above $500 billion per year, or more than 3 percent of GDP, throughout the 2010–2019period. As a result, debt held by the public would continue to grow as a percentage of GDP during that time.
That debt, which was as low as 33 percent of GDP in 2001, would reach an estimated 54 percent of GDP this year and grow to 68 percent of GDP by 2019.
The federal government simply won’t be able to fund — through federal deficit spending — state and local projects indefinitely, without long-term damage to America’s economy. The state and local paths to continuing prosperity won’t run through Washington.
See, in nearly one-hundred pages, the CBO report, CBO Budget and Economic Outlook, August 2009.