[Source: Business Insider] It could take the US economy nearly 10 years to recover from fallout stemming from the coronavirus pandemic and lockdowns to curb the spread of disease, the Congressional Budget Office said Monday.
The CBO now projects that over the 2020-2030 period, cumulative nominal output will be $15.7 trillion less than it previously said in January, a 5.3% cut. It dropped its real GDP forecast for the same period by $7.9 trillion, or 3%, according to the report.
US GDP isn’t expected to recover to the CBO’s previously forecast level until the fourth quarter of 2029, the report showed.
“Business closures and social distancing measures are expected to curtail consumer spending, while the recent drop in energy prices is projected to severely reduce U.S. investment in the energy sector,” said the CBO in the report, a letter in response to Senate Majority Leader Chuck Schumer of New York.
The roughly $3.3 trillion in stimulus provided by Congress in recent months will only “partially mitigate the deterioration in economic conditions,” the federal agency said.
The report comes amid continued deteriorating economic data in the US, even as the country begins to reopen following sweeping lockdowns that began in March to contain the coronavirus outbreak.
Economists anticipate that Thursday’s initial claims report will show that millions of Americans filed for unemployment last week. Friday’s May payroll report is expected to show that employers again slashed millions of jobs and that the unemployment rate surged — some estimates expect it to reach 20%.
There are some signs that a recovery may be ahead. The Institute for Supply Management’s May manufacturing survey increased from April lows, according to the Monday report. Still, demand remains uncertain, meaning any rebound may be slow.
Source: Business Insider
June 2, 2020
