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White House Doubles Its Inflation Forecast, Slashes Deficit Estimate

·1 min read
GraphicStock

The Office of Management and Budget on Friday revised its inflation outlook for the fourth quarter upward to 4.8%, more than twice the 2% level forecast in May.

That increase brings the White House in line with the Federal Reserve forecast. Both see inflationary pressure easing rapidly next year, dropping to 2.5% by the fourth quarter of 2022 and 2.3% by 2023.

As part of its mid-session budget review, the administration also boosted its estimate of annual economic growth to 7.2% this year, up from 5% projected in May. And it estimated that the deficit for fiscal year 2021 will be $3.1 trillion, a reduction of $555 billion from the earlier estimate of nearly $3.7 trillion. The measure of the deficit as a share of the economy also fell, dropping to an estimated 13.9%, down from a previous forecast of 16.7%.

The White House still projects deficits topping $1 trillion a year for the next decade, but it now says that the cumulative total of those deficits will be $684 billion lower than it previously projected.

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