An Update to the Economic Outlook for 2024 to 2034 in 20 Slides

An Update to the Economic Outlook for
2024 to 2034 in 20 Slides
June 2024
These slides reprise information presented in Congressional Budget Office, An Update to the Budget and Economic Outlook: 2024 to 2034 (June 2024),
www.cbo.gov/publication/60039. For additional details, see Chapter 2 of that report. Definitions of terms used in this slide deck appear at the end of the document.
The years referred to in these figures are calendar years.

1
GDP = gross domestic product.
Growth of Real GDP
Economic output is
projected to grow more
slowly in 2024 than it did last
year, as the growth of
consumer spending slows
and as the growth rate of
imports rises relative to the
growth rate of domestic
demand. Output is projected
to increase by 2.0 percent a
year in 2024 and 2025,
before settling at a growth
rate of roughly 1.8 percent a
year through 2034.

2
Uncertainty of CBO’s Projections of the Growth of Real GDP
CBO estimates that there
is approximately a two-
thirds chance that from
2024 to 2034, real GDP will
grow by a total of between
15 percent and 29 percent,
and the annual growth rate
of real GDP will average
between 1.3 percent and
2.4 percent.

3
Uncertainty of CBO’s Projections of Economic Output
CBO estimates that there is
approximately a two-thirds
chance that the annual
growth rate of real GDP will
be between 0.8 percent and
3.2 percent in 2024 and
between −0.5 percent and
3.9 percent in 2027.

4
Average Annual Growth of Real Potential GDP and Its Components
Real potential GDP is
projected to grow by an
average of 2.1 percent a
year through 2029, faster
than it has since the
recession that began in late
2007. That faster growth of
potential GDP stems mainly
from CBO’s projection of a
surge in net immigration
through 2026, which
increases the projected
growth of the labor force.

5
Payroll Employment: Average Net Monthly Change
The number of payroll
employees is projected to
grow more slowly from 2024
to 2029 than it has in recent
years as real output grows
more slowly than potential
output and as the growth of
the labor force slows in
2026.

6
Unemployment Rate
The projected slowdown in
economic growth is
expected to raise the
unemployment rate
gradually through early
2030.

7
Uncertainty of CBO’s Projections of the Unemployment Rate
roughly a two-thirds chance
that the average
unemployment rate in 2024
will be between 3.6 percent
and 4.0 percent.

8
Wage growth is measured as the growth of the employment cost index for wages and salaries of workers in private industry from the fourth quarter of one calendar year to the fourth
quarter of the next year.
Wage Growth
Slowing demand for labor
and declining inflation are
projected to slow the growth
of nominal wages gradually
through 2029. Even so,
wage growth is projected to
remain above its
prepandemic 2015–2019
average through 2034.

9
Labor Force Participation
Despite relatively high
participation rates among
recent and projected
immigrants, CBO expects
the effects of slowing
demand and the aging of
the population to reduce
the overall rate of
participation in the labor
force from 62.4 percent in
2024 to 61.9 percent in
2027.

10
Growth of Real Residential Investment
The growth of real
residential investment is
expected to rise through
2025 as recent increases in
immigration and projected
declines in mortgage interest
rates boost the demand for
housing.

11
Contributions to the Growth of Real GDP in the Near Term
In CBO’s projections, the
near-term slowdown in the
growth of economic output
stems largely from slower
growth in consumer
spending through 2026,
partly offset by faster growth
in residential investment and
exports.

12
Overall Inflation and Core Inflation
The growth of overall prices,
as measured by the change
in the PCE price index,
jumped in the first quarter of
this year after declining
since 2022. In CBO’s
projections, overall inflation
declines during the rest of
2024 and in 2025, reaching
the Federal Reserve’s target
of 2 percent by 2026 and
stabilizing thereafter.
PCE = personal consumption expenditures.

13
PCE = personal consumption expenditures.
Uncertainty of CBO’s Projections of Overall Inflation
chance that the inflation rate
as measured by the PCE
price index will be between
2.1 percent and 3.4 percent
in 2024.

14
Values represent the contributions of each category of goods and services to the growth rate of the price index for personal consumption expenditures (PCE). The sum of those
categories’ contributions equals the overall growth of that index. Values for 2000 to 2018 and for 2026 to 2034 are annual averages over those periods.
Contributions to Overall Inflation
Key reasons that inflation is
projected to be lower in
2024 than in 2023 include
the easing of upward
pressures on the prices of
goods because of improving
supply chains, rising
unemployment, and higher
long-term interest rates.
Those factors will be partly
offset in 2024 by strong
growth in the prices of some
services.

15
Interest Rates
In CBO’s projections, the
Federal Reserve keeps
the federal funds rate at
5.3 percent through 2024
and then responds to
slowing inflation and rising
unemployment by cutting
that rate in the first quarter
of 2025. Starting this year,
the difference between the
federal funds rate and the
interest rate on 10-year
Treasury notes is
projected to gradually
revert to its long-run
average.

16
Uncertainty of CBO’s Projections of 10-Year Treasury Note Rates
chance that the average
interest rate on 10-year
Treasury notes will be
between 4.1 percent and
4.8 percent in 2024.

17
CPI-U = consumer price index for all urban consumers; GDP = gross domestic product.
Comparison of CBO’s Economic Forecasts With Those of the
Blue Chip Forecasters

18
GDP = gross domestic product; SPF = Survey of Professional Forecasters.
Comparison of CBO’s Economic Forecasts With Those in the
Survey of Professional Forecasters

19
CPI-U = consumer price index for all urban consumers; PCE = personal consumption expenditures; SPF = Survey of Professional Forecasters.
Comparison of CBO’s Inflation Forecasts With Those in the
Survey of Professional Forecasters

20
GDP = gross domestic product; PCE = personal consumption expenditures.
Comparison of CBO’s Economic Forecasts With Those of
the Federal Reserve

21
§ Real gross domestic product (GDP) is nominal GDP that has been adjusted to remove the
effects of changes in prices. Growth of real GDP is measured from the fourth quarter of one
calendar year to the fourth quarter of the next year.
§ Real potential GDP is the amount of real GDP that can be produced if labor and capital are
employed at their maximum sustainable rates.
§ The labor force consists of people age 16 or older in the civilian noninstitutionalized
population who have jobs or who are unemployed (available for work and either seeking work
or expecting to be recalled from a temporary layoff). The potential labor force is CBO’s
estimate of how big the labor force would be if economic output and other key variables were
at their maximum sustainable amounts.
§ The unemployment rate is the percentage of the labor force that is unemployed.
§ The labor force participation rate is the percentage of the civilian noninstitutionalized
population age 16 or older that is in the labor force.
Definitions

22
§ Real residential investment consists of construction of single-family and multifamily
structures, manufactured homes, and dormitories; spending on home improvements; and
brokers’ commissions and other ownership-transfer costs.
§ The inflation rate based on the personal consumption expenditures (PCE) price index is
measured from the fourth quarter of one calendar year to the fourth quarter of the next year.
§ Core inflation—as measured by the PCE price index or the consumer price index for all urban
consumers (CPI-U)—excludes prices for food and energy.
§ The term “federal funds rate” refers to the effective federal funds rate—the median interest
rate that financial institutions charge one another for overnight loans of their monetary
reserves, weighted by loan volume.
§ Values for 2000 to 2024 reflect data available from the Bureau of Economic Analysis and the
Bureau of Labor Statistics as of late May 2024. Those data contain updated values for the
first quarter of 2024, which were not available when CBO developed its current projections.
Definitions (continued)

An Update to the Economic Outlook for 2024 to 2034 in 20 Slides

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