WASHINGTON (Reuters) - The Congressional Budget Office revised its 2023 U.S. economic growth forecast substantially upward on Wednesday to 0.9% from a meager 0.1% forecast in February, citing a stronger-than-expected labor market in the first half of the year.
The nonpartisan budget referee agency now projects a 2023 employment rate averaging 3.7% compared with 4.7% forecast in February.
CBO said the biggest contributors to the stronger first-half performance were higher-than-expected net exports, government purchases and residential investment.
"Real GDP is also estimated to have grown by 1.4% in the second quarter of 2023, rather than declining by 0.4%, as CBO projected in February," the agency said in its economic update report.
But CBO projects second-half growth to slow to 0.4% as consumer spending weakens and tighter lending standards reduce activity. It also projects a shallower rebound of U.S. GDP growth for 2024, to 1.5% from 2.5% projected in February. It also revised its 2025 growth forecast to 2.4% from the February forecast.
The CBO report did not update federal budget forecast data.