CBO says that coronavirus will have longlasting effects on the US economy for a minimum of 10 years. The Congressional Budget Office(CBO) is a federal agency within the legislative branch of the United States government that provides budget and economic information to Congress. “Business closures and social distancing measures are expected to curtail consumer spending, while the recent drop in energy prices is projected to severely reduce US investment in the energy sector.
Recent legislation will, in CBO’s assessment, partially mitigate the deterioration in economic conditions,” CBO director Phillip Swagel said. In a letter to lawmakers, he projected that the virus will reduce US economic output by 3% through 2030, a loss of $7.9tn. Swagel wrote this as a response to an inquiry from Senator Chuck Schummer. A better part of a full decade is necessary for the US to recover from this pandemic and related shutdown.
The Congressional Budget Office also said that the US economy will be $15.7 trillion smaller for at least the next 10 years. The CBO had already forecasted a decline in economic growth for the next two years and now expanded it to the next ten years to show that the severity of the economic shock.
This pandemic also reduces gross domestic product by $7.9 trillion, or by 3% in a period of 2020 to 2030.
Did this Pandemic Beat the US Economy?
The Coronavirus pandemic beat the US economy by filling about 41 million Americans to unemployment. Many people are benefiting unemployment benefits for the past 10 weeks alone. According to the jobs report for the month of May, submitted on last Friday, shows another wave of job losses. The rate of unemployment is at its ever highest and is climbing to 19.6%. Due to the uncertainty in economic growth because of this pandemic, the Trump administration won’t release updated economic projections.
Even though the administration has been poured trillions of dollars into the economy through several government policies and actions by the Federal Reserve, unemployment has not been stopped. Now, Congress is discussing another package of $3 trillion and the renewal of several aid programs that are set to expire. The aid programs include a temporary boost to unemployment benefits.
As per CBO’s findings, the emergency stimulus package that was passed by Congress last March will partially mitigate the deterioration in economic conditions.
“If future federal policies differ from those underlying CBO’s economic projections, for example, if lawmakers enact additional pandemic-related legislation, then economic outcomes will necessarily differ from those presented here.
In order to avoid the risk of another Great Depression, the Senate must act with a fierce sense of urgency to make sure that everyone in America has the income they need to feed their families and put a roof over their heads.
The American people cannot afford to wait another month for the Senate to pass legislation. They need our help now,” the CBO said. They also reminded us that if the current situation is continuous, we will see a 16 trillion reduction in economic growth for the next decade. Republicans should stop blocking legislation to provide more assistance given that 40 million workers have lost their jobs already due to the shutdowns that have sent the economy downward.