A nationwide business shutdown and surge in United States government spending will nearly quadruple the federal deficit to a record $3.7 trillion this fiscal year as the country fights the coronavirus pandemic, congressional forecasters said.
According to the media report U.S. gross domestic product will plunge by nearly 40% on an yearly basis in the second quarter.
These projections made by nonpartisan Congressional Budget Office.
But the Congressional Budget Office forecast an economic resurgence in the second half of the year, and said unemployment would crest at 16% but remain in double digits throughout 2021.
The Congressional Budget Office report illustrated the fiscal pressures lawmakers in Congress face as they prepare to craft new legislation to respond to the pandemic.
Congress has already passed $3 trillion in spending on healthcare, small businesses and other measures to combat the outbreak and its economic effects.
“If the laws currently in place governing spending and revenues generally remained unchanged and no significant additional emergency funding was provided, the federal deficit would be roughly $3.7 trillion in fiscal year 2020 and $2.1 trillion next year,” the Congressional Budget Office said.
In March, the Congressional Budget Office projected deficits of just over $1 trillion in each of those years.
The federal debt would equal 101% of GDP by Sept. 30, when the 2020 federal fiscal year ends, and would grow to 108% by the end of fiscal 2021, Congressional Budget Office said.
The agency predicted real GDP will decline 5.6% in 2020 and then grow 2.8% in 2021. But economic activity for 2021 would still be 6.7% below a projection the CBO issued in late January.