While new information about the novel Coronavirus continues to develop and economic uncertainty remains, the Congressional Budget Office (CBO) updated an economic forecast to account for the pandemic.
According to the forecast, the second quarter of 2020 – which closed at the end of March—is in for a sharp contraction, even accounting for the recently enacted stimulus legislation.
CBO estimates that the U.S. gross domestic product will fall seven percent during the second quarter and should that occur “the decline in the annualized growth rate reported by the Bureau of Economic Analysis would be about four times larger and would exceed 28 percent.”
The forecast also predicts a growth in the unemployment rate to exceed 10 percent during Q2 and offers that the 6.6 million new claims of unemployment reports from April 2 are roughly 10 times larger than any single week during the recession from 2007 to 2009.
“The analysis incorporated an expectation that the current extent of social distancing across the country would continue—on average, and with local variation—for the next three months,” CBO wrote.
“Information about economic conditions and the spread of the novel coronavirus is changing rapidly, and CBO is monitoring it closely,” CBO wrote. “As new information becomes available about the disease, actions being taken to respond to it, and the resulting impact on the economy, CBO will incorporate as much of that information as possible into its estimates of the costs of legislation being considered by the Congress.”