Estimated FY2026 Budget Deficit

From CBO.

Source: CBO. Notes: Solid light purple is FY2024, solid dark purple is FY2025, dashed black is FY2026 estimate for cumulative deficit.

As of 2026Q2, we’re nearly a percentage point above full employment, according to CBO’s estimate of potential GDP. Shouldn’t the deficit be shrinking, rather than increasing, as a share of GDP?

 

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