Additional Information About the Economic Outlook: 2025 to 2035

In this report, the Congressional Budget Office provides additional details about the economic forecast that it published, along with the agency’s baseline budget projections, in The Budget and Economic Outlook: 2025 to 2035 earlier this year. By statutory requirement, CBO produces annual reports outlining the agency’s projections of what the federal budget and the economy would look like in the current fiscal year and over the next 10 years if current laws governing federal taxes and spending generally remained in place throughout the projection period. The agency’s current economic projections reflect laws enacted and policy measures taken through December 4, 2024.

In CBO’s economic projections for the 2025–2035 projection period:

• Economic growth cools in calendar years 2025 and 2026 and then averages roughly 1.8 percent a year from 2027 to 2035;
• Inflation continues to ease over the next two years, reaching the Federal Reserve’s target rate of 2 percent by 2027 and stabilizing thereafter; and
• In response to falling inflation, slower job growth, and a rising unemployment rate, the Federal Reserve continues to lower the federal funds rate in 2025 and 2026 and then keeps that rate roughly flat over the remainder of the projection period.