The U.S. budget deficit will be lower than previously forecast in fiscal 2015 and 2016, according to the Congressional Budget Office.
The shortfall will narrow to $414 billion in the year that begins on Oct. 1, from $426 billion this fiscal year, the nonpartisan government agency said Tuesday in Washington. The CBO in March forecast a deficit of $455 billion in 2016 and $486 billion in 2015.
The revisions, if realized, means the next president of the United States will inherit a fiscal situation in 2017 that’s improved in the short run but will start to deteriorate starting in 2018 as entitlement spending surges.
The agency also increased its forecast for 2016 economic growth, estimating an expansion of 3.1 percent measured fourth quarter to fourth quarter. The previous estimate was for 2.9 percent growth.
Inflation measured by Personal Consumption Expenditure index will increase to 1.8 percent in 2016 from 0.6 percent in 2015, according to CBO.
Between now and the November 2016 presidential election, Congress will need to raise the nation’s debt limit to avert a potential default.
The Treasury’s cash will be sufficient to cover all usual payments until mid-November or early-December, unless Congress increases debt limit, the CBO also said in a separate report.