CBO, Biden Administration, IMF and Other Forecasts

CBO released its ten year outlook today (as did the IMF in the WEO January update). Continued but decelerating growth, slightly less optimistic than Administration, noticeably less than the IMF, and FT-Booth survey.

Figure 1: GDP reported (bold black), CBO (tan), Administration (light blue square), IMF (pink), FT-Booth survey (red triangle), Survey of Professional Forecasters (green line), GDPNow of 1/17 (blue +), all in bn.Ch.2017$ SAAR. IMF, FT-Booth, GDPNow levels calculated by iterating growth rate on relevant lagged level. Source: BEA 2024Q3 3rd release, CBO Budget and Economic Outlook, January 2025, Economic Report of the President, 2025, IMF WEO January 2025, FT-Booth Macroeconomists Survey, Philadelphia Fed, Atlanta Fed, and author’s calculations. 

The economy is projected by CBO to continue to grow (under current law, using data available as of mid-January), and the output gap to remain positive for quarters to come. As of 2024Q3, the output gap was 1.8% (log terms), using the most recent estimate of potential GDP (compared to 2.6% using the June 2024 vintage of potential GDP). The output gap will be 1% in 2024Q4 according to the Atlanta Fed’s nowcast of GDP.

The IMF forecast (based on exchange rates Oct 22-Nov 19) is in line with Atlanta Fed nowcast, but considerably more optimistic for 2025Q4, with q4/q4 growth in 2025 pegged at 2.4% (not far from the FT-Booth median forecast).

Figure 2: GDP reported (bold black), CBO (tan), potential GDP estimate from CBO (gray),GDPNow of 1/17 (blue +), all in bn.Ch.2017$ SAAR. NBER defined peak-to-trough recession dates shaded gray. GDPNow levels calculated by iterating growth rate on relevant lagged level. Source: BEA 2024Q3 3rd release, CBO Budget and Economic Outlook, January 2025, Atlanta Fed, NBER, and author’s calculations. 

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