{"id":210263,"date":"2024-03-05T01:58:19","date_gmt":"2024-03-05T01:58:19","guid":{"rendered":"https:\/\/michigandigitalnews.com\/index.php\/2024\/03\/05\/divergence-in-interest-rate-projections\/"},"modified":"2025-06-25T17:21:13","modified_gmt":"2025-06-25T17:21:13","slug":"divergence-in-interest-rate-projections","status":"publish","type":"post","link":"https:\/\/michigandigitalnews.com\/index.php\/2024\/03\/05\/divergence-in-interest-rate-projections\/","title":{"rendered":"Divergence in Interest Rate Projections"},"content":{"rendered":"

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CBO projection and SPF mean forecast diverge, by nearly a percentage point in 2024.<\/p>\n

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Figure 1:<\/strong> Ten year Treasury yield (black), projected by CBO (tan), SPF mean (blue), TIPS ten year (red), all in %. NBER peak-to-trough recession dates shaded gray. Source: Treasury via FRED, CBO, Philadelphia Fed, NBER.\u00a0<\/em><\/p>\n

CBO\u2019s projection is based on current law, while the various forecasters in the SPF are not similarly constrained. That, I think does not explain the difference.<\/p>\n

The implications for interest payments (hence total vs. primary deficit) differ as a consequence.<\/p>\n

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Figure 2:<\/strong> Federal interest payments in bn.$, SAAR (blue bar, left log scale), and ten year Treasury (black), and CBO projection (red), both in % (right scale). 2024Q1 is for January-February. Source: CBO, Treasury via FRED.\u00a0<\/em><\/p>\n

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