The Congressional Budget Office (CBO)—the federal government’s nonpartisan accounting agency—has revised its U.S. budget deficit projections for 2024. According to the CBO, the 2024 deficit will likely balloon to $1.92 trillion—an over $400 billion increase from their initial projections in February. Overall, the budget deficit is predicted to far outpace 2023’s gap of $1.69 trillion.
In the revised CBO economic forecast, the agency sees a pick-up in the U.S. gross domestic project (GDP); however, this comes with a return of higher inflation as well. The federal accounting agency sees the Federal Reserve now holding off on any cut to interest rates until at least the first quarter of 2025. Interestingly, the revised CBO projections were finalized in May, prior to the most recent Federal Reserve meeting—suggesting the data could have played a role in the central bank’s decision not to cut rates this quarter.
Concerningly, the CBO’s revised data suggests that the U.S. deficit is widening as a share of GDP. Previously, the agency had projected that the deficit would shrink over the 2024 fiscal year as a share of GDP. The debt-to-GDP ratio is projected at 6.7 percent, compared with the February forecast of just 5.3 percent. In 2023, the U.S. recorded a ratio of 6.3 percent.
As to the cause for the revision, the CBO pointed to several Biden government actions and policy changes, including its several student loan forgiveness plans, which added $145 billion to the deficit. Additionally, Biden’s foreign aid bill, which sent a new round of U.S. taxpayer dollars to Ukraine, Israel, and Taiwan, is cited as a cause for the revisions.
