- Economic recovery to be slow without vaccine
- Recovery not to begin until next year, according to Congressional Budget Office
A vaccine for COVID-19 is crucial for at least two reasons – full health confidence and full economic recovery from the pandemic.
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First, full health confidence. The Congressional Budget Office (CBO) anticipates many consumers will not be comfortable nor confident enough to resume their normal spending habits until they have been vaccinated for COVID-19. Until a vaccine is readily available en masse, this agency sees some amount of social distancing to remain with us into the foreseeable future. The agency also believes that social distancing will slow the country’s economic recovery.
Even without a vaccine, the CBO expects economic activity to increase as concerns about the pandemic lessen and state and local governments ease stay-at-home orders in Q3 2020. However, the CBO said, “Challenges in the economy and the labor market are expected to persist for some time.”
Second, full economic recovery. The CBO is now projecting that the economic recovery from the COVID-19 pandemic won’t begin until next year and that the US will NOT recover from the COVID-19 pandemic until 2029.
The CBO projects the COVID-19 pandemic will cost almost $8T in lost economic output this decade. This projection is down from the CBO’s pre-pandemic economic forecasting.
The agency notes the enormous decline in consumer spending amidst unemployment numbers comparable to those during the Great Depression. While many of those one in four Americans now out of work will be back to work as states reopen this summer, the CBO estimates it will take nearly a decade for employment numbers to return to pre-pandemic levels.
All of the CBO’s projections incorporate the more than $2T in federal financial relief assistance designated for and to businesses and individuals adversely affected by the COVID-19 pandemic.
Lastly, the CBO continues its uncertainty about the pandemic’s “true” effect on the economy and the “true” effect of the federal government’s financial rescue program. The more that information becomes available, the more the CBO’s projections are likely to change.
Thanks to the Congressional Budge Office and Marketplace.