US Economy on verge of facing $7.9tn loss due to global pandemic

Congressional Budget Office of the United States has projected that the country’s economy will take almost a decade to fully recover due to novel coronavirus.

Media reports said that Congressional Budget Office has forecasted the current outbreak of novel coronavirus will cut US economic output by 3% between this year and 2030.

CBO estimates this loss as $7.9tn. The warning comes as millions of people have been unemployed due to lockdown measures.

CBO said the majority of the damage was caused by the sharp contraction in economic activity this year, which it had not predicted in its last 10-year report.

“Business closures and social distancing measures are assumed to reduce consumer spending, while the recent drop in energy prices is forecasted to severely reduce US investment in the energy sector,” CBO director Phillip Swagel said.

“Recent law will partially mitigate the deterioration in economic conditions,” he added.

Since the virus pandemic hit the US the government and the central bank have provided trillions of dollars of support for the world’s biggest economy.

America’s unemployment rate hit 14.7% in April and the US Labor Department is expected to confirm that it reached 20% in May.

In March that figure stood at just 4.4% having risen from a 50-year low from the month before.

There is an ongoing discussion in the US Congress over a new $3tn a new stimulus plan as well as a proposal to renew several federal aid programs that would otherwise lapse, including a temporary increase to jobless benefits that are set to expire in July.