New analysis shows the US will be dealing with the economic fallout of COVID-19 for at least a decade.
The Congressional Budget Office (CBO) projects that the impacts of COVID-19 will reduce cumulative nominal output by $15.7 trillion through 2030.
“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,” CBO director Phillip Swagel said in a letter to lawmakers. “Recent legislation will, in CBO’s assessment, partially mitigate the deterioration in economic conditions.”
But Mr Swagel also noted that if lawmakers enacted “additional pandemic-related legislation” then the outcome could be different. Democratic lawmakers are currently pushing for a second stimulus against fierce resistance from their Republican counterparts, who fear a second round of fiscal spending could add trillions to the country’s already massive deficit.
“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,” senators Chuck Schumer and Bernie Sanders said in a joint statement.
Washington’s first stimulus package included income support of $1,200 per adult and an increase to unemployment benefits, as well as around $500 billion for bailouts of businesses impacted by the coronavirus, including airlines and companies “critical to maintaining national security”.
The CBO’s report comes as more than 40 million Americans have lost their jobs, with the Department of Labor expected to reveal that unemployment now stands at 20 per cent.