Congressional Budget Office: Will Take the US 10 Years to Catch Up to Where It Would Have Been Without Lockdowns

Our growth and prosperity to remain suppressed for at least another decade

But at least the dancing nurses were fun

Editor’s note: My personal hunch is that this is hugely optimistic. I think 3 months lost, are 3 months lost forever. It’s a tall order to presume eventual convergence with where we would have been on any timescale. That said, even a convergence after a decade is still terrible news, especially when you consider how irrational and pointless the lockdowns were.

Please consider a Comparison of CBO’s May 2020 Interim Projections of GDP and Its January 2020 Baseline Projections.

CBO Key Points

  • CBO projects that over the 2020–2030 period, cumulative nominal output will be $15.7 trillion less than what the agency projected in January.
  • CBO projects that over the 11-year horizon, cumulative real output (in 2019 dollars) will be $7.9 trillion, or 3.0 percent of cumulative real GDP, less than what the agency projected in January
  • CBO also marked down its projection of nominal output because the agency expects that inflation will be weaker as a result of the pandemic.
  • Lower projected inflation rates, particularly in 2020 and 2021, reduce the level of prices and nominal GDP relative to what CBO projected in January.

That PDF was a summary sent to Senate Democrat Leader Charles Schumer.

Let’s investigate additional charts from the CBO report Interim Economic Projections for 2020 and 2021.

Unemployment Rate

CBO Unemployment Rate Projection

Between February and April of this year, the number of people employed fell by more than 25 million and the size of the labor force by more than 8 million. In CBO’s projections, the unemployment rate is 15.8 percent in the third quarter of this year. After that, labor market conditions gradually stabilize and begin to improve more materially

Real Output

Real Output Measured CBO

Although economic  conditions are projected to improve following their sudden drop, real output is expected to be 1.6 percent lower in the fourth quarter of 2021 than it was in the fourth quarter of last year.

Job Losses

Job Losses by Industry During March and April CBO

The more than 20 million nonfarm payroll jobs lost during March and April were concentrated in industries that rely on a high degree of in-person interactions, including leisure and hospitality, retail trade, and educational services. The leisure and hospitality industry was hit particularly hard, losing more than 8 million of its 17 million jobs.

CBO Economic Projections

CBO's Economic Projections for 2020 and 2021

Employment Projection

CBO Employment Projection

Blue Chip Projections

Comparison of CBO's Economic projections with the Blue Chip Survey

GDPNow Model Projection for Q2 2020

GDPNow and Nowcast 2020-05-29

GDPNow Forecast is Negative 51.2 Percent

The GDPNow Forecast is Negative 51.2 Percent.

GDPNow may be too pessimistic for Q2.

However, I believe the CBO and Blue Chip forecasts are too optimistic for the rest of the year.

Fed Can Print Money But It Cannot Print Jobs

I can find at least three instances of that saying dating back to 2010 so don’t give me credit.

Belts and Suspenders

However, I can claim a sarcastic Don’t Worry, the Fed has Belts and Suspenders

Unfortunately, all the Fed is doing is creating zombie corporations unable to survive expect with permanently low interest rates.

Grim Economic Data

  1. May 8: Over 20 Million Jobs Lost As Unemployment Rises Most In History
  2. May 15: Retail Sales Plunge Way More Than Expected
  3. May 15: Industrial Production Declines Most in 101 Years
  4. May 15: GDPNow Forecasts the Economy Shrank by a Record 42%. It’s 40.4% as of May 28.

Ripple Impacts May Last Years

The economic data has been grim and the ripple impacts may last for years.

Global COVID-19 Risk Ranges Up to $82 Trillion

To understand the total global risk, please see Global COVID-19 Risk Ranges Up to $82 Trillion

Ripple Impacts

For a detailed synopsis of the state of the economy and the ripple impacts, please see The Economy Will Not Soon Return to Normal: Here’s Why.

Source: Mish Talk

  1. Michael says

    Congressional Budget Office: Will Take the US 10 Years to Catch Up to Where It Would Have Been Without Lockdowns

    That is the catch. If the shutdown is to wipe clean the old economy and create a new economy based on AI and 5-G tech then it will take a shorter time.

  2. Mensch59 says

    The planned collapse of the old economy — planned because the ruling class knows that the USD as the world’s reserve currency is so sick-unto-death as to be on life support and planned using a minor pandemic as the cover story — is to change GDP accounting to accounting based on the monetization & capitalization of the earth’s remaining natural resources to be valued in the hundreds of trillions or quadrillions of dollars and divied up amongst the world’s billionaires.

    But don’t expect Amerika’s fake leftists — the trolls who are not stupid, but who are wiley & intellectually sharp Machiavellians, sadists, narcissists, psychopaths, and sociopaths — and who write their lies so smoothly — how they are antiwar, and how they oppose private ownership of the means of life, and how they are opposed to the ruling class, and how they are revolutionary, and how they are so conscious & conscientious, and how they champion the noble cause of fighting for & with the poor & the working poor & the working class — to comment on this change in accounting.

  3. cechas vodobenikov says

    empire collapse always regards suicide—the stupidity and gullibility of the people…this is evident in the USA where the so called progressives are more fascist than the self described conservatives…how will the US ruling class address this?
    increase their mercenary military by employing more obese incompetents
    increase their private militias—the US possesses many that are paid for by the Pentagon—many are recruited from Peru, Colombia, Brazil, Sudan, etc
    increase their huge #1 ranked prison population
    increase their world leading homelessness
    send their huge population of mentally ill (the most per capita of all nations) to re-education camps
    legalize sexual perversions and prostition to increase taxes and address their famous sexual repression
    legalize more illicit drugs to benefit the rich and keep the peasants narcotized…
    the US ruling class is the only class in the US that has class consciousness…unless u believe transgenderism is a class

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