The impact of the coronavirus pandemic and government’s response to it will drop the nation’s real gross domestic product (GDP) by $15.7 trillion by 2030, according to the latest projections from the Congressional Budget Office (CBO). The new projection is 5.3% lower than its pre-coronavirus analysis released in January.
CBO is also predicting that the second quarter of 2020 will see the level of nominal GDP $790 billion (14.2%) lower than its January forecast.
“The two largest differences between the two forecasts result from the economic effects of the COVID-19 pandemic in reducing output and the legislation enacted between January and early May in response, which partly offsets that reduction,” the CBO report states. “Subsequently, the difference between those projections of nominal GDP narrows from $533 billion (9.4% lower in the May projection) by the end of 2020 to $181 billion (2.2% lower) by 2030. As a result of those differences, CBO projects that over the 2020–2030 period, cumulative nominal output will be $15.7 trillion less than what the agency projected in January. That difference constitutes 5.3% of the value for cumulative nominal GDP for that period that the agency projected in January.”
The agency cautions that the estimates come with “an unusually high degree of uncertainty” of what will happen next with the pandemic. CBO cites the impact of social distancing policies on the economy and the possibility of new government relief efforts in the future as variables that could impact future predictions.