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The Gap Between Actual and Potential Output
Percentage of Potential GDP
2015 2010 2005 2000 1995 8 6 4 2
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U.S. Overview: When Will Growth Resume? Douglas Elmendorf Director - - PowerPoint PPT Presentation
U.S. Overview: When Will Growth Resume? Douglas Elmendorf Director - - PowerPoint PPT Presentation
Congressional Budget Office Milken Institute Global Conference U.S. Overview: When Will Growth Resume? Douglas Elmendorf Director April 27, 2009 The Gap Between Actual and Potential Output Percentage of Potential GDP 8 6 4 2 0 -2 -4
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Estimated Macroeconomic Effects of the ARRA
Fourth Quarters of Calendar Years
2009 2010 2011 … 2019 Real GDP (Percentage change from baseline) Low estimate of effect 1.4 1.1 0.4
- 0.2
High estimate of effect 3.8 3.4 1.2 Unemployment Rate (Percentage-point change from baseline) Low estimate of effect 0.5 0.6 0.3 High estimate of effect 1.3 1.9 1.0
SLIDE 4
The Effect of Rebates on Income and Consumption
2008 2007 11500 11000 10500 10000 9500 9000 Actual Income Actual Consumption Excluding Rebates Excluding Rebate Effect
Billions of Dollars
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BAA Corporate Bond Yield 30-Year Conventional Mortgage Rates
2 009 200 8 200 7 9.5 8.5 7.5 6.5 5.5 4.5 2 9 2 8 2 07 9 .5 8 .5 7 .5 6 .5 5 .5 4 .5
Key Business and Household Interest Rates
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Net Lending In Credit Markets
10 20 30 40 2004Q1 2005Q1 2006Q1 2007Q1 2008Q1 Rescue Activity All Other Rest of the World Depositories
Percentage of GDP
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Treasury
Troubled Asset Relief Program (TARP): $356 billion in 2009 and 2010 Fannie Mae & Freddie Mac: $250 billion for existing book of business in early 2009; $120 billion for new business over 2009-2019 period Note: CBO’s baseline for these transactions includes an estimate of the net cost of transactions for the TARP and the housing GSEs (Fannie Mae and Freddie Mac). Broadly speaking, CBO computed the present value of anticipated cash flows using an appropriate discount factor that recognizes the riskiness of the cash flows.
FDIC and NCUA
Deposit Insurance Fund: net costs totaling $36 billion 2009-2010; net receipts totaling $51billion 2009-2019 Assistance to Citigroup, Debt and other Guarantees: no net budget impact over the 2009-2019 period Note: Deposit insurance activities are recorded in budget on cash basis.
Federal Reserve
Reductions in Interest Rates Loans to Financial Institutions Takeover of Bear Stearns Support for AIG Support for Short-Term Corporate Borrowing Support for Money Market Funds Support for Primary Dealers Support for the Mortgage Market Support for Consumer/Small Bus. Lending Assistance to Citigroup Currency Swaps Purchases of Long-Term Treasury Securities Note: The impact on federal budget from these Fed actions is uncertain.
Budgetary Impact of Actions Taken in Support of the Financial Markets
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The Size of the Federal Reserve’s Balance Sheet
Trillions of Dollars
A PR JA N OCT JUL A PR JA N OCT JUL A PR 2009 2008 2007 2.5 2.0 1.5 1.0 0.5 0.0
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Total Deficits or Surpluses
1969 1974 1979 1984 1989 1994 1999 2004 2009 2014 2019
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2 4 CBO's Baseline Projection CBO's Estimate
- f the
President's Budget Actual Projected
Percentage of GDP
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Revenues and Outlays in CBO’s Baseline and the President’s Budget
1969 1974 1979 1984 1989 1994 1999 2004 2009 2014 2019 15 20 25 30 Revenues Outlays Actual Projected
Percentage of GDP
Note: Solid lines represent history and CBO’s baseline projections of revenues and outlays as a share of gross domestic product; dashed lines represent CBO’s projections of the President’s budget.
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