CBO Says Coronavirus Outbreak and Response Will Quadruple the Federal Deficit
WASHINGTON – Due to a combination of the passage of multiple economic stimulus bills and a deep recession caused by the coronavirus outbreak, the federal deficit for the 2020 fiscal year will quadruple to $3.7 trillion, the Congressional Budget Office said Friday.
In dizzying detail that officials cautioned was subject to “enormous uncertainty,” the nonpartisan office said it now expected the U.S. economy to shrink by 5.6 percent this year and for 2020 to end with an employment rate hovering near 12 percent.
The CBO said the numbers are largely the result of the near complete shutting down of the economy in the second quarter to slow the spread of the coronavirus, and that the recovery will begin as soon as this summer, as state and local governments ease stay-at-home orders, bans on public gatherings, and other measures restraining economic activity.
“After a sharp contraction in the second quarter, economic growth is expected to average about 17 percent at an annual rate in the second half of calendar year 2020,” the report says.
“Increases in consumer spending are expected to more than offset further declines in business investment during that period. In 2021, real GDP is projected to grow by 2.8 percent, on a fourth-quarter-to-fourth-quarter basis,” it said.
According to the report, the four coronavirus relief bills signed by President Donald Trump this spring, will pile more than $2 trillion onto the $24.6 trillion national debt over the course of the remaining six months of the fiscal year.
That’s more than double the deficit record set during President Barack Obama’s first year in office, in the immediate aftermath of the global financial crisis.
