US: in 28 of 41 years the Congressional Budget Office expected a bigger deficit for the next year than came
US: miss of the next fiscal year’s deficit projection, excluding later laws
That is without laws passed after the projection, which raised the deficit in 29 of 41 years. The largest misses: fiscal 2021, the deficit 3.5% of GDP smaller than projected; fiscal 2023, 3.8% of GDP bigger.
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Each year the US Congressional Budget Office (CBO) publishes a baseline budget projection under current law. Later it evaluates its own errors, separating what laws passed afterwards changed from errors about the economy and estimates.
By fiscal year: the miss of the next-year deficit projection, excluding later laws, in % of GDP. Above zero the deficit came in smaller than projected, below zero bigger. Dots mark the largest misses.
- Fiscal 2021, baseline 2020-03
3.5% of GDP smaller than projected (laws: +11.2% of GDP to the deficit)
- Fiscal 2023, baseline 2022-05
3.8% of GDP bigger than projected (laws: +0.0% of GDP to the deficit)
- Next-year projections in all
41: smaller 28, bigger 13
CBO’s evaluation of its spring baselines (1984–2024): “economic and technical” errors of the budget-year deficit, in % of actual GDP. One projection a year. “About right”: under 0.05% of GDP. Sign test: p = 0.028.
Including later laws the picture changes: the deficit came in bigger than projected in 19 of 41 years. A current-law baseline does not promise what Congress will decide. The card on the US budget projection and outcome shows how this looks over ten years.
A question for this picture
Is a cautious deficit projection an error or a sensible margin?