CBO Sees US Deficits Rising Over 30 Years, Economic Growth Slowing

• The U.S. Congressional Budget Office (CBO) on Thursday, March 27, 2025, projected significant increases in federal budget deficits and debt over the next 30 years, in part due to rapidly rising interest costs, as it sketched out sluggish economic growth and a shrinking workforce. It also projected real economic growth, forecast at 2.1% in 2025, slowing to 1.4% in 2055.
• CBO’s latest long-term budget projections show federal deficits accelerating to 7.3% of the economy in fiscal year 2055 from 6.2% in 2025. That is up from the 30-year average from 1995 to 2024 of 3.9%. The U.S. public debt, meanwhile, is seen rising alarmingly, to 156% of GDP in 2055 from 100% in 2025.
• As the non-partisan budget analyst for Congress, the CBO bases its projections on current law, which could change significantly in the short term. That is due in part to the push now underway by President Donald Trump and his fellow Republicans who control the U.S. Senate and House of Representatives to slash federal spending and the government's workforce, while also extending costly tax cuts that are due to expire at the end of this year under current law.
• Trump also has ordered tough border security measures and efforts to deport immigrants that experts see potentially denting the economy as a result of labor shortages. Whether or not Congress will be able to pass legislation implementing Trump's agenda could be determined over the next several months.
• Another unknown factor is the outcome of court challenges to Trump policies that are already pending. The CBO does not include any consideration of the outcome of those court cases in its long-term projections. The report also does not factor in the potential impact on the U.S. economy from a broad range of tariffs Trump is implementing against foreign goods.

(Source: Reuters)