Congressional Budget Office Waves off Recession Woes

The Congressional Budget Office stated today that they forecast that the slowing economy will not sink into an election year recession, and that an economic rebound is likely beginning next year as housing and financial market turmoil fades.

In the meantime, the U.S. budget deficit will grow to $219 billion this year, up from the $163 billion registered last year, according to a CBO report submitted to Congress. However, this  forecast by Congress’ nonpartisan budget analyst does not include the cost of an economic stimulus measure that is quickly moving through Congress and could cost around $150 billion or more. The deficit projection for fiscal 2008, which ends Sept. 30, also does not include more money Congress is likely to approve this year for the war in Iraq.

“Although recent data suggest that the probability of a recession in 2008 has increased, CBO does not expect the slowdown in economic growth to be large enough to register as a recession,” CBO said. “CBO expects the economy to rebound after 2008, as the negative effects of the turmoil in the housing and financial markets fade,” the semi-annual budget and economic report said.

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