US budget deficit expected to hit $1.9T in fiscal year 2024

By Ovunc Kutlu

ISTANBUL (AA) - The US's federal budget deficit is expected to hit $1.9 trillion in fiscal year 2024, according to a report Tuesday by the non-partisan Congressional Budget Office (CBO).

The recent estimate is $0.4 trillion or 27% higher than the CBO's previous projection made in February.

"Adjusted to exclude the effects of shifts in the timing of certain payments, the deficit amounts to $2.0 trillion in 2024, equal to 7.0 percent of gross domestic product (GDP), and $2.8 trillion in 2034, or 6.9 percent of GDP," it said in a statement.

"Deficits from 2024 to 2034, which total $24 trillion, are about 70 percent larger than their historical average over the past 50 years when measured in relation to economic output," it added.

Federal outlays, or spending, is estimated to total $6.8 trillion, or 23.9% of GDP, in 2024 and reach 24.9% of GDP by 2034, due to growth in interest costs and higher spending on programs that benefit older people, including Medicare and Social Security, said the CBO.

Revenues, on the other hand, are expected to total $4.9 trillion, or 17.2% of GDP, in 2024 and rise to 18% of GDP by 2027, it added.

The CBO said inflation measured by the price index for personal consumption expenditures is expected to fall from 2.7% in 2024 to a rate roughly in line with the Federal Reserve’s long-run goal of 2% by 2026 and stabilize after that.

The Fed's benchmark interest rate is projected to decline in the first quarter of 2025, according to the CBO.