The economy went into reverse at the beginning of this year, reeling from an unusually harsh winter that disrupted consumer spending, factory production and other business activity.
Growth in the gross domestic product, the economy's total output of goods and services, recovered in the second quarter, advancing at an annual rate of 4 percent, according to the government's first estimate. That forecast will be revised on Thursday.
Even with the rebound, economists have lowered their outlook for the entire year, given the weak start. Economists at JPMorgan Chase are forecasting that the economy will grow by 1.9 percent this year, when measured from the fourth quarter, down from 3.1 percent in 2013.
The CBO also projected that the government would run a deficit of $506 billion for the budget year that ends Sept. 30. That would be the lowest level of Barack Obama's presidency.
The CBO foresees a slight increase from its earlier $492 billion projection of this year's deficit but also modest improvement over the coming decade.
Obama inherited a recession and a trillion-dollar-plus deficit picture when he took office in the aftermath of the 2008 fiscal crisis. The economy has recovered more slowly than hoped; some of the recent drop in the jobless rate is due to frustrated job-seekers leaving the labor market.
The report confirms a trend of short-term improvement in the deficit but an unsustainable long-term fiscal path if Washington doesn't cut spending or raise additional revenue.
Over the long term, the CBO said "the large and increasing amount of federal debt would have serious negative consequences" including the risk of a crisis that could raise interest rates.
The latest numbers come as the GOP-controlled House and Obama are taking a break from the budget, debt and tax battles that have flared up several times since Republicans won back the House in 2010.
Obama did not see attacking the deficit as a priority during his first term. Republicans forced him to the negotiating table in 2011 and extracted more than $2 trillion in spending cuts over the following decade, though little of that savings came from big benefit programs such as Medicare.