Fourth stimulus check live updates: is it coming in June? Monthly child tax

Taxes


Biden’s big budget comes with a modest growth outlook for an ageing country

President Joe Biden’s first budget proposal comes with a big price tag – at $6 trillion, roughly 50% higher than pre-covid-19 federal spending – but, at least for now, projects a relatively modest long-term lift to the economy, likely reflecting concerns about the ageing U.S. population.

The administration’s spending blueprint for the fiscal year ending in September 2022 would increase spending on infrastructure, education and combating climate change, echoing familiar priorities for the first-term Democrat.

But it comes with forecasts for near-term growth that do not reflect the rapid improvement in the economy so far this year. With the help of $1.9 trillion in additional stimulus spending approved earlier this year, the economy grew at an annualized rate of 6.4% in the first quarter, a pace projections from both the Survey of Professional Forecasters and Federal Reserve officials see persisting through the year.

By contrast, the Biden budget pegs growth this year at just 5.2%. Council of Economic Advisers Chair Cecilia Rouse said forecasts underlying the budget were locked down in early February, assumptions administration officials plan to revisit later this year.

Also notable is the rapid deceleration in growth expectations after next year, to between 1.8% and 2% each year from 2024 through 2031. While that is squarely in line with the longer-run output estimates from Fed officials, it is at least a quarter percentage point short of the consensus among private forecasters, and around a full point south of the amped-up projections from the Trump administration’s final budget proposal two years ago, before the covid-19 pandemic.



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