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Projection: GDP expected to bounce back in 2021, unemployment to see slower return

Projection: GDP expected to bounce back in 2021, unemployment to see slower return
Posted at 10:07 PM, Jul 02, 2020
and last updated 2020-07-02 22:07:41-04

The United States’ Gross Domestic Product is expected to have a modest comeback in 2021 while unemployment will be slower to recover for years to come, according to a government projection from the Congressional Budget Office.

The nonpartisan government agency that provides policy guidance for members of Congress said that unemployment is projected to remain above pre-pandemic levels through 2030.

Thursday’s estimates from the CBO indicate that real GDP in 2021 will jump 4% in 2021 from 2020 after taking a projected 5.8% drop in 2020. The CBO then projects that real GDP will increase 2.9%. In years following, the GDP is expected to level off at 2.2%.

But after unemployment dropped to 3.5% in 2019,, the unemployment rate is expected to be 7.6% in 2021, followed by 6.9% in 2022 and 5.9% in 2023 and 2024. Data released Thursday pegged the US unemployment rate at 11.1% in June.

The CBO stresses there is uncertainty in its forecast given the pandemic.

“The severity and duration of the pandemic are subject to significant uncertainty,” the CBO said. “In particular, several important epidemiological characteristics of the coronavirus remain unclear: Much still needs to be learned about its transmissibility and lethality and about the immunity conferred on people who have recovered from it. Moreover, the severity and duration of the pandemic will be affected by how various mitigation measures reduce the spread of the virus and by when vaccines and additional treatments become available—outcomes that remain highly uncertain.”