The ongoing coronavirus pandemic will haunt the US economy for a decade, wiping close to $8tn off economic growth, according to new projections released by the Congressional Budget Office (CBO) on Monday.
In a letter to lawmakers CBO director Phillip Swagel projected the virus will reduce US economic output by 3% through 2030, a loss of $7.9tn.
“Business closures and social distancing measures are expected to curtail consumer spending, while the recent drop in energy prices is projected to severely reduce US investment in the energy sector,” Swagel wrote in response to an inquiry from Senator Chuck Schumer. “Recent legislation will, in CBO’s assessment, partially mitigate the deterioration in economic conditions.”
Since the pandemic hit the US trillions of dollars have been poured into the economy via government stimulus programs and actions by the Federal Reserve.
But the moves have not stopped unemployment soaring to levels unseen since the 1930s Great Depression. So far some 40 million Americans have lost their jobs and on Friday the Labor Department is expected to announce the unemployment rate reached 20% in May, up from 14.7% in April and just 4.4% in March.
Congress is currently debating another $3tn aid package and the renewal of several federal aid programs that are set to expire, including a temporary boost to unemployment benefits that will lapse at the end of July. Republicans have balked at the size of the new stimulus program. Schumer seized on the CBO release to press for action.
“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,” said Schumer in a statement. “The American people cannot afford to wait another month for the Senate to pass legislation. They need our help now.”