The feds expect the coronavirus crisis to drain trillions of dollars from the US economy over the next decade, in the latest sign of the pandemic’s economic devastation.
The crisis will lead to a $15.7 trillion reduction in the nation’s gross domestic product — the value of all goods and services produced here — from this year to 2030 without adjusting for inflation, the Congressional Budget Office said Monday.
The nonpartisan agency expects a plunge of $7.9 trillion when adjusting for inflation, or 3 percent of the cumulative real GDP the office projected for that 10-year period in January.
The CBO said social-distancing measures aimed at controlling the deadly virus and the resulting business closures will likely reduce consumer spending, while a drop in energy prices is expected to curtail US investment in the industry.
Legislation aimed at blunting the economic impact of the virus will “partially mitigate the deterioration in economic conditions,” CBO director Phillip L. Swagel said. He added that the projections are uncertain because it’s unclear how the pandemic will develop going into next year and how it will affect the economy.
“Additionally, 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,” Swagel wrote in a letter to Democratic Senate Minority Leader Charles Schumer, who requested the analysis.
The nation’s GDP already suffered its worst contraction since the Great Recession in the first quarter of 2020 as the pandemic roiled the global economy. The CBO’s analysis also came ahead of the feds’ monthly employment report on Friday, which is expected to show unemployment at or near 20 percent in May.
Schumer and Sen. Bernie Sanders (I-Vt.) said the gloomy numbers underscore the need for Congress to pass another coronavirus stimulus bill. Lawmakers have already approved nearly $3 trillion in stimulus spending since late March, and they’ll be talking about another package “in the next month or so,” Senate Majority Leader Mitch McConnell said last week.
“In order to avoid the risk of another Great Depression, the Senate must act with a fierce sense of urgency to make sure that everyone in America has the income they need to feed their families and put a roof over their heads,” Schumer and Sanders said in a joint statement. “The American people cannot afford to wait another month for the Senate to pass legislation.”
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