Key Highlights
- New report from Congressional Budget Officeindicates economy to return to pre-pandemic levels by mid-2021
- Same report said unemployment not falling to pre-pandemic levels until end of decade
Congressional Budget Office Report Indicates Brighter Economy Sooner and Full Employment Much, Much Later
Some would give mixed reviews to the just-released report on the economy and joblessness by the non-partisan Congressional Budget Office (CBO).
The CBO report indicates that the US economy will return to pre-pandemic levels by mid-2021. The downside of this report indicates that it will take until 2024 before the number of employed Americans will return to pre-pandemic levels.
The Good News
CBO officials told reporters that a brightening belief in the economy stemmed from large sectors of the economy adapting better and faster to the COVID pandemic than originally anticipated. Officials also tipped their hats to the two already passed economic aid packages authorized by Congress. This CBO report anticipates the economy growing by +3.7% for the year.
The CBO report projects the economy to remain below potential levels on its current path until 2025. Then, by 2030, the report anticipates the economy to run below potential again.
Other independent forecasts including one from the Brookings Institute released two weeks ago are projecting that more aid, such as Biden’s proposed $1.9T recovery package, would help the economy grow faster and top its former pre-pandemic level by the end of 2020.
The Not-So-Good News
This latest CBO report anticipates that the number of employed workers will not return to pre-pandemic levels until 2024. It also anticipates that the unemployment rate will not fall to 3.5% until the end of this decade.
The chairman of the Federal Reserve, Jerome H. Powell, continues to warn that the economy has “a long way from a full recovery” due to millions remaining out of work and many small businesses remaining under “severe” pressure.
Both Powell and officials at the CBO believe that getting the pandemic under control is central to a rebound in growth and employment.
Thanks to The New York Times.
