Biden’s large household comes with modest growth prospects for an aging country

President Joe Biden’s first budget proposal comes at a heavy cost – at $ 6 trillion, about 50% higher than pre-Covid-19 federal spending – but forecast relatively modest long-term economic growth, at least for now, likely reflecting concerns about the aging US population.

The government’s spending plan for the fiscal year ending September 2022 would increase spending on infrastructure, education and tackling climate change, reflecting the Democrat’s well-known priorities in the first term.

But it comes with short-term growth projections that don’t 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% for the first quarter, a pace both the Survey of Professional Forecasters and Federal Reserve officials expect to continue year round.

In contrast, the Biden budget is projecting growth of just 5.2% this year. Cecilia Rouse, chair of the Economic Advisory Council, said the budget’s underlying projections were locked in early February. Assumption management officials plan to visit again later this year.

Also noteworthy is the rapid slowdown in growth expectations after the next year, to between 1.8% and 2% annually between 2024 and 2031. While this is exactly in line with Fed officials’ longer-term production estimates, it is at least a quarter percentage point below the consensus of private forecasters and about a full point south of the elevated projections from the Trump administration’s final budget proposal two years ago, ahead of the Covid- 19 pandemic.