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February 24, 2023

CBO releases updated budget and economic projections

On February 15, 2023, the Congressional Budget Office (CBO) released The Budget and Economic Outlook: 2023 to 2033. These budget and economic projections will serve as the new baseline for revenue and cost estimates for legislation considered by Congress. According to the report, the CBO "expects economic growth to stagnate and inflation to slow in 2023 in response to the sharp rise in interest rates during 2022."

The CBO projects the economy will grow by 0.3% in fiscal year 2023 and economic growth will average 1.8% from 2023–2033 (Figure 1). The CBO further projects the unemployment rate to increase by 1.7 percentage points, reaching 5.1% by the fourth quarter of 2023. The unemployment rate is then projected to decrease to its long-run rate of 4.5% by the third quarter of 2026.

The CBO sees inflationary pressures subsiding in 2023 and 2024 as the economy slows and the Federal Reserve's interest rate hikes take hold. The CBO projects consumer prices, as measured by the consumer price index (CPI), will increase by 3.5% (year-over-year) during the fourth quarter of 2023 and by 2.1% in the fourth quarter of 2024.

The CBO estimates that the budget deficit for fiscal year 2023 will be $1.4 trillion or 5.4% of gross domestic product (GDP). The CBO estimates that the budget deficit will rise to $2.8 trillion in 2033 (7.3% of GDP). From 2024 through 2033, the CBO projects that the federal government will spend $80.0 trillion (24.1% of GDP), while raising $59.7 trillion (18.0% of GDP), in revenue (Figure 2). The CBO projects that the budget deficits will push the debt-to-GDP ratio from 98% in 2023 to 118% in 2033.

The CBO estimates the cumulative deficit over the 2023 through 2032 period to be $3.1 trillion (about 20%) higher than its prior estimates released in May 2022, largely due to newly enacted legislation and the impacts of CBO higher-projected inflation and interest rates. The legislative changes passed by the prior Congress added about $1.5 trillion to the deficit over the 2023 through 2032 period or nearly one-half of the total increase in the deficit from the prior May 2022 estimates.

CBO projections assume that taxes and spending under current law will remain in place and do not reflect the impacts of any additional legislation that Congress might enact. Companies and industry groups need to pay careful attention to the fiscal and economic outlook as the federal government's growing fiscal imbalance could significantly influence the policy agenda.

Note: The growth rates correspond to the federal government’s fiscal year (i.e., October 1 through September 30). Calendar-year growth rates could differ somewhat. Figures are rounded.

Source: Congressional Budget Office, The Budget and Economic Outlook: 2023 to 2033, February 15, 2022

Source: Congressional Budget Office, The Budget and Economic Outlook: 2023 to 2033, February 15, 2022.


Contact Information
For additional information concerning this Alert, please contact:
Quantitative Economics and Statistics Group
   • Robert Carroll (
   • Brandon Pizzola (
   • AJ McKeown (

Published by NTD’s Tax Technical Knowledge Services group; Jennifer A Brittenham, legal editor