How CBO Projects Income

by Sabrina I. Pacifici on July 25, 2013

“Projections of income earned by individuals and businesses are an integral part of the Congressional Budget Office’s (CBO’s) regular 10-year projections of the economy and a key component of its projections of federal revenues and outlays. CBO projects all the major income measures that are presented in the Commerce Department’s national income and product accounts (NIPAs). The total of those measures is gross national income (GNI), which can be broken down into gross domestic income (GDI) and net income from the rest of the world. GDI consists primarily of the income earned by labor and capital in the production of goods and services in the United States, and net income from the rest of the world consists of labor and capital income from the rest of the world minus payments of labor and capital income to the rest of the world. Using the NIPAs framework ensures that CBO’s projections of income are consistent with its projections of gross domestic product (GDP), which measures overall economic output produced in the United States for final use (consumer spending, private investment, government spending, and net exports).”

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