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CBO: US Economy Could Take 10 Years to Catch Up After Coronavirus Pandemic

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The US economy will be affected by the coronavirus pandemic for almost a decade, according to projections by the Congressional Budget Office (CBO).

The CBO forecasts the outbreak will cut US economic output by 3% between this year and 2030, a loss of $7.9 trillion.

The warning comes as tens of millions of people are out of work due to lockdown measures.

The CBO is a federal agency within the US government that provides budget and economic information to Congress.

America’s historic downturn comes even after trillions of dollars have been pumped into the economy.

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The CBO said the majority of the loss was caused by the sharp contraction in economic activity this year, which it had not predicted in its last 10-year report, published in January.

CBO director Phillip Swagel wrote in response to an inquiry from Senate Minority Leader Charles Schumer: “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,” he added.

Since the virus pandemic hit the US the government and the Fed have provided trillions of dollars of support for the world’s biggest economy.

Still, unemployment has soared to levels not seen since the Great Depression of the 1930s as more than 40 million Americans have already been put out of work.

The US unemployment rate hit 14.7% in April and on June 5 the Labor Department is expected to confirm that it reached 20% in May. In March that figure stood at just 4.4% having risen from a 50-year low from the month before.

There is an ongoing debate in the Congress over a new $3 trillion a new stimulus plan as well as a proposal to renew several federal aid programs that would otherwise lapse, including a temporary increase to jobless benefits that is set to expire in July.