Home / US / The corona virus will cost the economy nearly $ 8 trillion, says the Congressional Budget Office

The corona virus will cost the economy nearly $ 8 trillion, says the Congressional Budget Office

New Jersey First Lady Tammy Murphy, during the Coronavirus Disease (COVID-19) outbreak in Newark, New Jersey, on May 6, distributes bags of meals, face masks, and other personal protective goods to needy residents outside of NAN Newark Tech World . 2020.

Mike Segar | Reuters

According to a government estimate on Monday, the corona virus is expected to consume around $ 7.9 trillion in economic activity over the next ten years, even if all rescue means are used to offset the effects of the pandemic.

By fiscal 2030, the virus will reduce real economic output ̵

1; nominal GDP adjusted for inflation – by 3% compared to the first economic estimates in January before the pandemic broke out, the Congress Budget Office said.

“Company closings and social distancing measures are expected to curb consumer spending, while the recent fall in energy prices is expected to significantly reduce US investment in the energy sector,” said CBO director Phillip L. Swagel in a written response to a request by Sen. Chuck Schumer, DN.Y. “According to CBO, the most recent legislation will partially mitigate the deterioration in economic conditions.”

Nominal GDP is expected to be $ 15.7 trillion, or 5.3%, less than originally forecast due to the corona virus.

Congress passed the $ 2.2 trillion CARES bill to cushion the blow of the pandemic and is debating another measure that could reach $ 3 trillion.

In the second quarter, however, the largest decline in GDP in the history of the United States should still be recorded, while the unemployment rate is expected to be close to 20% in May, the highest value since the global economic crisis.

Schumer said that the CBO estimates emphasize the arguments for quick action on another expense account.

“To avoid the risk of another global economic crisis, the Senate must act with extreme urgency to ensure that everyone in America has the income they need to feed their families and have a roof over their heads,” said the Senator in a statement.

The CBO said it had cut its longer-term growth estimate due to expected low inflation despite all public spending and other Federal Reserve bailouts. The office also warned that further adjustments to its projections are likely as more is known about the pathway of the corona virus, its ultimate economic damage, and the impact of Congress funding.

“These economic forecasts are characterized by unusually high levels of uncertainty, particularly due to the uncertainty about how the pandemic will develop this year and next, how the pandemic and social distancing will affect the economy, and how the latest policy measures will affect it the economy will impact and how economic data will ultimately be recorded for a period when extreme changes have disrupted standard estimation methods and data sources, “Swagel wrote.

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