Private economists generally expect the economy to grow by about 2.6 percent in the coming year. President Clinton used that figure himself last Friday. The experts who make a living doing this believe the economy will grow at 2.6 percent next year, slightly slower in the first six months, slightly more robust in the second six months. Under those conditions, the budget surplus would be expected to decline from last June's estimates. Indeed, the bipartisan Congressional Budget Office is expected to project declining surpluses as a consequence of slowing growth when it releases its own projections Jan. 31.
Economic output is central to budget projections.
The more the economy grows, the less the government has to spend on unemployment and other support benefits, and the more the Treasury collects from income and corporate taxes. Those projections assumed an annual growth rate averaging 3 percent over the period. White House spokesman Jake Siewert said the OMB's latest projections were based on late November data, before economists realized how quickly the economy was slowing. The economy grew at a blistering 5.6 percent pace in the second quarter of 2000. As of November, private economists were forecasting growth averaging 3.3 percent a year for the coming decade.