It could take a decade for the U.S. economy to fully recover from the lingering effects of the coronavirus pandemic and subsequent business shutdowns, the Congressional Budget Office said Monday.
Adjusted for inflation, the pandemic is on pace to reduce gross domestic product by $7.9 trillion, or 3%, from 2020 to 2030, the agency projected.
“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,” the CBO said in its analysis.
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The pandemic has battered the U.S. economy, with about 41 million Americans filing for unemployment benefits over the past 10 weeks alone. Friday’s jobs report for May is expected to show another wave of job losses, with the unemployment rate climbing to 19.6%, according to Bloomberg data, the highest since the Great Depression.
The Trump administration said it won’t release updated economic projections this summer because of uncertainty from the pandemic.
The $2 trillion emergency stimulus package that Congress passed in March will partially mitigate the deterioration in economic conditions, the CBO said.
To be sure, the agency cautioned that a “high degree of uncertainty” surrounds its economic projections, depending on how the pandemic and social distancing measures unfold.
“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,” the CBO said.