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 aging U.S. population, Trend reports citing Reuters.
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.
It sees the U.S. jobless rate averaging 5.5% this year, down from the current 6.1% and falling to 3.8% - close to its pre-pandemic low of 3.5% - by 2023 and holding there through 2031. The Fed, by comparison, pegs the longer-run unemployment rate at 4%, the professional forecasters survey puts it at 4.1% and even the former Trump administration projected it at 4.2%.