The President's Fiscal Year 2020 Budget, released March 12, includes a significantly more optimistic economic outlook than that of the Blue Chip Economic Indicators (BCEI) and the Congressional Budget Office (CBO). The three roughly contemporaneous forecasts represent a range of potential paths for the US economy over the next 10 years. The forecast in the President's Budget assumes that the Administration's policies reflected in its budget — including permanent tax reform, regulatory reform, and infrastructure projects — will be enacted. In contrast, the BCEI forecast is a consensus of private sector forecasts and the CBO forecast assumes that current law is maintained.

Table 1 compares the growth rates of real gross domestic product (GDP), the unemployment rate, the inflation rate (as measured by the Consumer Price Index for all urban consumers), and the interest rate (as measured by the rate on 10-year Treasury notes) in the President's Budget to the BCEI and CBO forecasts.

Forecasted real GDP growth over the 2020-29 period is significantly higher in the President's Budget (2.9%) relative to the BCEI (2.0%) and CBO (1.7%) forecasts. This persists over the 10-year period. In particular, the real GDP growth rate in the President's Budget ranges from 2.8% to 3.1% whereas the BCEI forecast ranges from 1.8% to 2.1% and the CBO forecast ranges from 1.6% to 1.9%. Similarly, the unemployment rate forecast in the President's Budget over the 2020-29 period (4.0%) is somewhat lower than the BCEI (4.3%) and CBO (4.6%) forecasts.

Inflation and interest rates in the President's Budget are fairly similar to the BCEI and CBO forecasts. In particular, over the 2020-29 period, the President's Budget forecasts an inflation rate of 2.3% whereas the BCEI forecasts 2.2% and the CBO forecasts 2.4%. Likewise, the interest rate in the President's Budget over this same period is forecast to be 3.7% relative to 3.7% in the BCEI forecast and 3.7% in the CBO forecast.

Table 1. Comparison of economic forecast in the President's Budget to contemporaneous economic forecasts (%)

Note: The unemployment rate is an annual average. Real GDP growth is the year-over-year percent change in real GDP. Nominal interest rate is the nominal interest rate on 10-year Treasury notes. The Consumer Price Index is for all urban consumers (CPI-U).

Source: Congressional Budget Office, The Budget and Economic Outlook: 2019 to 2029, January 28, 2019; Office of Management and Budget, A Budget for a Better America — President's Budget FY 2020, March 12, 2019.

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