Even with the addition of infrastructure and social spending, the Biden administration said on Friday it projected deficits over the next decade to be $ 684 billion lower than its previous forecast. However, this improvement would still leave deficits over the next decade totaling $ 12.49 trillion.
Over the past two years, the total deficits have worsened as the government approved trillions of dollars in support for individuals and businesses caught in an economy rocked by the coronavirus pandemic.
Last year’s $ 3.13 trillion deficit surpassed the previous record of $ 1.4 trillion set in 2009 under the Obama administration, when the government was spending heavily to deal with a severe post-crisis recession 2008 financial year.
The administration’s midterm review said much of the improvement in the deficit forecast for this year came from a strong economic rebound, reflecting the impact of President Joe Biden’s economic policies.
The review improved the administration’s economic forecast to show an economy growing this year by 7.1%, measured from the fourth quarter of last year. This is up from the administration’s previous projection for growth this year of 5.2%.
In addition to boosting growth this year, the administration’s new forecast increases inflation, predicting consumer prices to rise 4.8% this year from last year, from an earlier forecast of a price increase of only 2%. Officials said the increase reflected the higher inflation the country has experienced so far, resulting in part from supply chain bottlenecks.