In a new insight, Director of Fiscal Policy Jordan Haring walks through the Congressional Budget Office’s (CBO) recently released economic projections for 2026 to 2028.

Key points:

• CBO’s latest projections are more pessimistic than its September forecast, as well as recent projections from the Federal Reserve and the administration’s Office of Management and Budget.
• CBO expects real gross domestic product (real GDP) growth to total 2.2 percent in 2026 as the positive impacts of the One Big Beautiful Bill materialize; real GDP growth will stabilize around 1.8 percent per year thereafter.
• CBO expects the unemployment rate to rise from 4.4 percent today to 4.6 percent by the end of 2026 and then fall to 4.5 percent by the end of 2027 and to 4.4 percent by the end of 2028.
• CBO expects inflation to cool over the next few years while the average interest rate on 10-year Treasury notes will rise from 4.2 percent in 2026 to 4.3 percent in 2027 and 2028 as term premiums rise from the low levels seen in recent years.

Read the analysis.