By Shalanda Young
Today, OMB released the 2023 Mid-Session Review (MSR), which updates the Administration’s budget estimates to account for economic, technical, and legislative developments that have occurred in the months since we released the President’s Budget in March and provides updated economic projections. Here are a few key takeaways.
First, the MSR shows that under the President’s leadership, we continue to make historic progress reducing the federal deficit after four years of rising deficits under the previous Administration. Thanks to the strength of our economic recovery—powered by the American Rescue Plan—revenues have increased significantly and the Administration has been able to responsibly wind down pandemic-related emergency spending. As a result of that progress, the MSR projects that, building on the more than $350 billion in deficit reduction we achieved last year, this year’s deficit will decline by $1.7 trillion. That represents the single largest nominal decline in the federal deficit in American history, and nearly $400 billion in deficit reduction beyond what the FY 2023 Budget projected just a few months ago. It’s also $2 trillion lower than the 2020 deficit the President inherited. The MSR also projects that over the coming decade, the President’s Budget policies will further reduce deficits by more than $2 trillion. And it’s important to keep in mind that these projections do not account for the impacts of the Inflation Reduction Act, which will deliver hundreds of billions of dollars in additional deficit reduction.
Second, the MSR reflects that our economy is transitioning from a historic and rapid recovery to stable and steady growth. Since the President took office, we’ve created more than 9.5 million jobs, and the economy has recovered all of the jobs that were lost during the pandemic. The unemployment rate has fallen to 3.5%—matching the lowest it’s been in more than 50 years. A record high 22 states have unemployment rates at or below 3 percent. And 2021 saw the strongest economic growth in nearly four decades. As the President has made clear—and as the MSR affirms—this next phase of growth will look different from the past year, with fewer quarters of record-breaking job creation and growth even as we continue to see strong job gains, solid consumer spending, higher wages, and better opportunities for workers. This is a sign that we’re progressing into the next phase of our recovery.
Third, as we navigate this transition, the President’s top economic priority continues to be tackling the challenge of inflation, without giving up the historic economic gains we’ve made over the past 18 months. While costs are still too high for too many families, the President’s economic plan is working and we’re on the right track. And thanks to the strength of our jobs recovery, the United States is well positioned to meet global challenges like inflation from a position of strength. In July, our economy had zero percent inflation, and on a monthly basis, real wages went up for the first time in almost a year. We’re in the midst of the fastest decline in gas prices in decades, with the national average price dropping below $4 a gallon. And last week, the President signed into law the Inflation Reduction Act, which will lower health care, prescription drug, and energy costs, and further reduce the deficit by asking the super wealthy and corporations to pay their fair share—all while ensuring no one making less than $400,000 a year will pay a penny more in taxes.
This is significant progress, and we’re not finished. In the weeks and months ahead, the Administration will continue taking action to build our economy from the bottom up and the middle out, deliver for working families, and ensure a future where everybody has a shot to live to their full potential.
Shalanda Young is the Director of the Office of Management and Budget