Daily Gold Market Report

Unrealistic Optimism:
A Critical Look at CBO’s Economic Projections

(USAGOLD – 2/12/2024) Gold prices are modestly down and silver prices solidly up in early trading Monday. Gold is trading at $2018.79, down $5.47. Silver is trading at $22.79, up 17 cents. The latest Congressional Budget Office (CBO) projections are overly optimistic, even deeming them unrealistic in light of the current economic challenges. The CBO’s forecasts rely on assumptions that appear disconnected from reality, such as an unemployment rate peaking at 4.4%, inflation reducing to 2% and falling further within five years, 200 basis points of interest rate cuts in the next 10 months, and a continuous influx of immigration contributing $7 trillion to GDP. These projections overlook critical factors like the actual unemployment rate being higher when accounting for those not in the labor force, the unrealistic expectations of no recessions, and the overlooked impacts of government borrowing on interest rates. These projections may misguide fiscal and monetary policies, suggesting that savvy investors and the public should prepare for a less optimistic economic future. The expectation of no recessions and the disregard for ongoing financial crises, suggests a need for more realistic fiscal and monetary policies.