Biden Budget Expects Growth Around 2% a Year Over Next Decade
(Bloomberg) -- President Joe Biden’s administration is cautious about projecting the growth returns that the economy will enjoy over the next several years as a result of his spending plans, according to the New York Times.
The White House budget proposal due to be released Friday predicts the economy would grow at an annual pace of just under 2% for much of the next decade, the Times reported, citing documents it obtained.
That is broadly in line with what economists, including those at the Federal Reserve, reckon to be the sustainable growth rate for the U.S. economy -- without adding much of a growth premium from Biden’s proposals to spend some $4 trillion on infrastructure and social safety nets.
It’s also a departure from the budgets of President Donald Trump, which predicted growth rates of 3% a year that exceeded what the majority of economists thought was possible.
The Biden budget also projects that unemployment will fall 2 percentage points to 4.1% by next year and stay below 4% in following years, according to the New York Times.
The White House economists don’t expect the current spike in inflation to last. They predict that the annual rate, which jumped above 4% in April, the highest since 2009 -- won’t exceed 2.3% a year over the coming decade. As a result, the White House expects the Federal Reserve to raise interest rates “gradually” in coming years.
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