Congressional Budget Office predicts slower economic growth and 4.7% unemployment into 2024

The Capitol Dome and East Front of the of the House of Representatives is seen in Washington, Wednesday, April 19, 2023. This year's projected government budget deficit has jumped by $130 billion, due in part to a proposed change to student loan repayment plans and a series of bank rescues organized by federal regulators, the Congressional Budget Office said Friday.(AP Photo/J. Scott Applewhite, File)

WASHINGTON (AP) — The Congressional Budget Office reported Wednesday that economic and job growth so far this year has been stronger than forecast in February, but an updated outlook sees parts of the economy as weakening through 2024.

The latest 10-year budget and economic outlook from the nonpartisan office shows how difficult it is to figure out where the United States is going in the wake of the pandemic. Many economists and investors were caught off guard as Federal Reserve interest rate increases, intended to combat high inflation, have not led to mass layoffs and a recession. Rather, growth and hiring have stayed relatively solid.

The CBO said it expects rates to continue to rise, as well as slower growth in the gross domestic product for the rest of this year and unemployment reaching 4.7% by the end of 2024.

In February, the agency projected that the unemployment rate would jump to 5.1%. It currently stands at 3.6%. The CBO now estimates that rate will end the year at roughly 4.1%.

Consumer spending is expected to flag later this year and labor force participation to decline as employers need fewer workers.

In a bright spot, inflation is expected to decline due to actions by the Fed to tame price increases, which rose at the highest annual pace in four decades in June of last year. The central bank has tried to reduce inflation by raising its benchmark interest rates. The Fed on Wednesday raised its key rate for the 11th time in 17 months, from roughly 5.1% to 5.3%, its highest level since 2001.

The CBO issues projections that are generally more pessimistic than those of other forecasters such as the Fed. The latest report acknowledges that uncertainty, saying “projections are highly uncertain, and many factors could lead to different outcomes."