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CBO Trims U.S. GDP Forecast for This Year, Lifts 2021 Projection

imageStock Markets10 hours ago (Jul 02, 2020 02:54PM ET)

(C) Bloomberg. A pedestrian wearing a protective mask waits to cross a street in the Times Square area of New York on May 12.

(Bloomberg) — The U.S. economy will see a slightly deeper contraction this year but a bigger rebound in 2021 than previously forecast, according to updated estimates from the Congressional Budget Office.

The non-partisan agency’s latest economic projections on Thursday showed gross domestic product will shrink 5.9% in 2020 and grow 4.8% next year on a fourth-quarter-to-fourth-quarter basis. In its May 19 estimate, the CBO had projected a 5.6% decline this year and growth of 4.2% in 2021.

The agency said it expects slightly more improvement in the job market this year and next, though it will remain much weaker than it was prior to the coronavirus pandemic. The unemployment rate is seen averaging 10.6% this year and 8.4% in 2021, better than prior forecasts of 11.5% and 9.3%, respectively.

The forecasts incorporate information available as of June 26, before the stronger-than-expected job gains reported earlier Thursday.

The effects of the pandemic-related lockdowns on the economy will linger for years to come, particularly for those just entering or new to the labor market. The CBO sees unemployment averaging 6.3% in 2023-2024, with GDP growth rates averaging 2.2%.

(C)2020 Bloomberg L.P.

CBO Trims U.S. GDP Forecast for This Year, Lifts 2021 Projection

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