Although the next few years will bring “solid” economic growth, the nonpartisan Congressional Budget Office on Tuesday painted a less rosy picture of the U.S. economy for the rest of the decade. Blame baby boomers.
The economy is likely to grow by about 3 percent each year through 2017, CBO said in its latest outlook for the U.S. economy and budget over the coming decade.
Then, growth is likely to “diminish to a pace that is well below the average seen over the past several decades,” the office said. That lower-than-average estimate primarily reflects the slowdown in labor-force growth caused by baby boomers growing older.
The unemployment rate has been stubbornly high, and has dropped in recent months at least partly for the “wrong reasons” — people leaving the labor force. In December, the most recent month for which data are available, the unemployment rate was 6.7 percent. CBO believes the unemployment rate is likely to remain above 6 percent through late 2016.
CBO said this was a forecast unusually ripe for surprises, though, so hold on tight. “The economic recovery has had unusual features that have been hard to predict, and the path of the economy in coming years is also likely to be surprising in various ways,” the report said. It ticked through a list of unknowns that could derail their carefully crafted predictions: changes to business confidence, fiscal policy, other countries’ economies, interest rates, and stock prices among them.