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Unless otherwise indicated, all years referred to in Chapter 1 are calendar years and all years in Chapter 2 are fiscal years. The economic outlook discussed in Chapter 1 is considered to be a forecast through the end of 1997 and a projection for 1998 through 2006. The forecast attempts to anticipate the cyclical movements in the economy and the effects of fiscal policy on the year-to-year changes in economic activity. The economic projection is designed to estimate the growth rates that will prevail on average for the entire period. Unemployment rates throughout the report are calculated on the basis of the civilian labor force. Numbers in the text and tables may not add to totals because of rounding. |
This volume is one of a series of reports on the state of the economy and the budget that the Congressional Budget Office (CBO) issues each year. It satisfies the requirements of section 202(f) of the Congressional Budget Act of 1974 for CBO to submit periodic reports to the Committees on the Budget about fiscal policy and to provide baseline projections of the federal budget. In keeping with CBO's mandate to provide objective and impartial analysis, the report contains no recommendations.
The analysis of the economic outlook was developed by the Macroeconomic Analysis Division under the direction of Robert Dennis and John F. Peterson. Mr. Peterson also wrote Chapter 1. The Budget Analysis Division prepared the outlay estimates under the supervision of Paul N. Van de Water and Robert Sunshine. The revenue estimates were done by the staff of the Tax Analysis Division under the supervision of Rosemary D. Marcuss and Richard Kasten. James Horney wrote Chapter 2, with the assistance of Jeffrey Holland. Matthew Salomon and Laurie Brown are the authors of Appendix A, and Daniel Kowalski wrote Appendix B.
Paul L. Houts, Sherwood D. Kohn, and Christian Spoor edited
the report. The authors owe thanks to Marion Curry, Dorothy Kornegay,
and Linda Lewis, who assisted in the preparation of the report. Kathryn
Quattrone prepared it for final publication.
June E. O'Neill
Director
August 1996
APPENDIXES
A - Evaluating CBO's Record of Economic Forecasts
B - Sequestration Update Report for Fiscal Year 1997
| TABLES | |
| 1. | Comparison of Congressional Budget Office and Blue Chip Forecasts for 1996 and 1997 |
| 2. | Comparison of CBO's and the Administration's Forecasts Assuming Balanced Budget Policy for 1995 Through 2006 |
| 3. | CBO's Budget Projections for Fiscal Year 1996 |
| 4. | Comparison of CBO's Projections for Fiscal Year 1996 and the Administration's Mid-Session Review |
| 5. | CBO's Estimates of the Fiscal Year 1997 Budget Resolution Conference Agreement |
| A-1. | Comparison of CBO, Administration, and Blue Chip Forecasts of Two-Year Average Growth Rates for Real Output |
| A-2. | Comparison of CBO, Administration, and Blue Chip Forecasts of Two-Year Average Inflation Rates in the Consumer Price Index |
| A-3. | Comparison of CBO, Administration, and Blue Chip Forecasts of Two-Year Average Interest Rates on Three-Month Treasury Bills |
| A-4. | Comparison of CBO, Administration, and Blue Chip Forecasts of Two-Year Average Long-Term Interest Rates |
| A-5. | Comparison of CBO, Administration, and Blue Chip Forecasts of Two-Year Average Real Interest Rates on Three-Month Treasury Bills |
| A-6. | Comparison of CBO and Administration Projections of the Two-Year Change in Wage and Salary Distributions Plus Book Profits as a Share of Output |
| A-7. | Comparison of CBO and Administration Projections of Five-Year Average Growth Rates for Real GNP |
| B-1. | CBO's Estimates of Discretionary Spending Limits for Fiscal Years 1996 Through 1998 |
| B-2. | Budgetary Effects of Direct Spending or Receipt Legislation Enacted Since the Budget Enforcement Act |
| FIGURES | |
| A-1. | CBO's Errors in Forecasting Two-Year Changes in Taxable Income Compared with Historical Two-Year Changes in the Statistical Discrepancy |
| BOX | |
| 1. | Accounting for Spectrum Auctions and Universal Telephone Service |