Unemployment will stay above 10% through the end of next year, according to a new congressional projection indicating that the economic pain from the pandemic could last much longer than anticipated.
The Congressional Budget Office, Congress’s nonpartisan group of budget experts, released a report Friday projecting that the economy is contracting rapidly due to business shutdowns and that while the economy will pick up in the second half of next year, the bounce back won’t be nearly strong enough to prevent a catastrophic blow to the labor force.
“Challenges in the economy and the labor market are expected to persist for some time,” CBO Director Phillip Swagel wrote in the projection on Friday.
In particular, the budget office sees unemployment averaging 10.1% in 2021, worse than in the darkest months following the 2008 financial crisis, after soaring as high as 16% this year.
In other words, the CBO does not foresee the “V-shaped” recovery in terms of GDP growth or employment that President Trump and other officials have said they expect.
The federal budget deficit is projected to be roughly $3.7 trillion for 2020 and $2.1 trillion in 2021 if government spending and revenues generally remain unchanged and no significant additional emergency funding is provided.
In March, before the coronavirus economic shutdown, the CBO’s projections for the deficits were just over $1 trillion for each of those years. Federal debt held by the public is predicted to be 101% of GDP by the end of fiscal year 2020, compared with 79% at the end of fiscal year 2019.
