The Congressional Budget Office today released updated projections for economic output, employment, interest rates, and a preliminary look at federal deficits for 2020 and 2021.
The economy will shrink at an annualized rate of 39.6 percent in the second quarter, according to the latest projections from the non-partisan Congressional Budget Office (CBO), its first projections to take into account the effects of the coronavirus pandemic.
According to the CBO:
In the second quarter of 2020, the economy will experience a sharp contraction, and CBO’s current economic projections include the following:
- Inflation-adjusted gross domestic product (real GDP) is expected to decline by about 12 percent during the second quarter, equivalent to a decline at an annual rate of 40 percent for that quarter.
- The unemployment rate is expected to average close to 14 percent during the second quarter.
- Interest rates on 3-month Treasury bills and 10-year Treasury notes are expected to average 0.1 percent and 0.6 percent, respectively, during that quarter.
For fiscal year 2020, CBO’s early look at the fiscal outlook shows the following:
- The federal budget deficit is projected to be $3.7 trillion.
- Federal debt held by the public is projected to be 101 percent of GDP by the end of the fiscal year.
CBO’s most recent budget baseline projections released in March reflected the economic forecast from January, which did not include the consequences of the pandemic. The view of deficits and debt that CBO presented today is far more limited than an updated baseline, which would include account-level projections for the entire budget. CBO expects to publish such a baseline later this year.