GDP and the unemployment situation may be even more dire than previously predicted, according to a new report from the Congressional Budget Office.
Last week, the CBO downgraded its fourth quarter growth projection to -5.9%, annually. The group forecasts that the economy will expand by 4.8% in the fourth quarter of 2021, not enough to make up for losses accrued in 2020. In May, the CBO predicted that the economy would contract by 5.6% yearly in the final quarter of the year, and pick up by 4.2% in 2021. The organization predicts that economic growth will be 3.4% lower over the next decade, thanks to the coronavirus.
The Congressional Budget Office estimates that unemployment will stay elevated through 2030. Unemployment is expected to fall to 10.5% at the end of this year. The jobless rate will then decline to 8.4% in 2021, and plateau at 6.1% for the remainder of the decade. In February, unemployment shrank to 3.5%, before skyrocketing to 14.7% in April. Last week, June’s unemployment numbers came out at 11.1%, with the economy adding 4.8 million jobs. There are still 14.7 million fewer jobs in the United States than in February.
The CBO’s forecasts were based on data collected through June 26th. This latest estimate assumed that social distancing measures would gradually be removed through the third quarter of 2021. The organization admitted that the forecast is full of uncertainty, and depends on what direction the virus, public policy, and consumer demand go in.