“This is not a good sign for the economy because there would be fewer jobs for consumers. Evidently, businesses do not share the ebullience consumers have,” said Sung Won Sohn, an economics professor at Loyola Marymount University in Los Angeles. “The key to future economic growth is business spending. They are likely to provide additional cover for the Fed to cut interest rates next Wednesday for the first time in a decade because of rising risks to the economy’s outlook from a bitter trade war between the United States and China, and slowing global growth. Business investment contracted for the first time in more than three years and housing declined for a sixth straight quarter.įederal Reserve Chairman Jerome Powell early this month flagged the two sectors as areas of weakness in the economy. The forecast incorporates economic and other information available as of January 12, 2021, as well as estimates of the economic effects of all legislation (including pandemic-related legislation) enacted up to that date.But the fairly upbeat report from the Commerce Department on Friday had some red flags for the 10-year-old economic expansion, the longest on record. The agency plans to release those budget projections later in February and a more detailed report about this forecast later this winter. In CBO’s projections, the unemployment rate gradually declines through 2026, and the number of people employed returns to its prepandemic level in 2024.ĬBO is using this economic forecast as the basis for updating its budget projections for 2021 to 2031. Specifically, real (inflation-adjusted) gross domestic product (GDP) is projected to return to its prepandemic level in mid-2021 and to surpass its potential (that is, its maximum sustainable) level in early 2025. In its new economic forecast, which covers the period from 2021 to 2031, the Congressional Budget Office therefore projects that the economic expansion that began in mid-2020 will continue. As a result, the extent of social distancing is expected to decline. Over the course of the coming year, vaccination is expected to greatly reduce the number of new cases of COVID-19, the disease caused by the coronavirus. The impact was focused on particular sectors of the economy, such as travel and hospitality, and job losses were concentrated among lower-wage workers. The 2020–2021 coronavirus pandemic caused severe economic disruptions last year as households, governments, and businesses adopted a variety of mandatory and voluntary measures- collectively referred to here as social distancing-to limit in-person interactions that could spread the virus.

2019 us economic report