By David Lawder
WASHINGTON (Reuters) -The U.S. federal debt burden will reach 185% of economic output in 2052, the Congressional Budget Office projected on Wednesday, an improvement over last year’s long-term estimate but a projection marked by exponentially higher interest costs and weak population growth.
The CBO in 2021 had projected federal debt in 2051 at 202% of U.S. GDP output, with this year’s improvement due to a strong recovery from the COVID-19 pandemic. The estimates assume current tax and spending laws remain in place over the next 30 years.
The CBO estimated U.S. net interest outlays as a percentage of GDP to rise to 7.2% in 2052 versus 1.6% this year.
This is driven both by the growing size of the debt and higher interest rates over the next 30 years, the non-partisan fiscal referee agency said. The average interest rate on federal debt is expected to grow from 1.8% in 2022 to 3.1% in 2032 and 4.2% in 2052.
While the 2022 budget deficit is expected to be significantly smaller as a share of the economy — 3.9% — than during the high COVID-19 pandemic spending years of 2020 and 2021, deficits grow significantly in subsequent years, reaching 11.1% of GDP in 2052.
The CBO also released a new demographic report, projecting that U.S. population growth will grow to 369 million people in 2052 from 335 million in 2022 — an annual growth rate of 0.3%, just a third of the rate from 1980 to 2021.
The report estimates that the 25-54 prime working age population grows at a lower rate of 0.2% annually in the 30-year forecast period. And U.S. deaths start to exceed births in 2043, meaning that all U.S. population growth from that year onward depends solely on immigration.
CBO said this year’s report assumes lower fertility rates, while new information about the effects of COVID-19 has led it to increase projected mortality rates for people age 65 and older during the first two decades of the forecast period.
(Reporting by David LawderEditing by Chris Reese and Chizu Nomiyama)
