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CBO Forecasts Rebound in GDP Growth by Midyear
GDP is expected to return to its pre-pandemic size by mid-2021 and the labor force is forecast to rebound to its pre-pandemic level in 2022, the Congressional Budget Office said Monday.
The nonpartisan CBO credited the vaccine rollout and stimulus legislation enacted in 2020 for a quicker-than-expected economic recovery, but didn’t assume any new stimulus measures in its projections.
For 2021, the CBO’s forecast projects GDP growth of 3.7%. Beyond this year, the updated forecast anticipates unemployment dropping to 4% between 2024 and 2025, and for the Federal Reserve to begin increasing the federal funds rate in mid-2024.
The CBO said it upgraded its estimates “because the downturn was not as severe as expected and because the first stage of the recovery took place sooner and was stronger than expected.” Its previous forecast, published last July, projected that COVID-19 would sap $7.9 trillion of economic activity over the next decade.
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- ◦Economy
