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Updated figures sent to Democratic Minority Leader Sen. Chuck Schumer on Monday by the Congressional Budget Office highlight a “significant markdown” in GDP as a result of the pandemic. Over the next 11 years, the agency forecasts output will be $7.9 trillion less than its baseline projections put out in January.
The cumulative nominal output will be $15.7 trillion less than previous forecasts.
“Business closures and social distancing measures are expected to curtail consumer spending, while the recent drop in energy prices is projected to severely reduce U.S. investment in the energy sector,” the letter read. “Recent legislation will, in CBO’s assessment, partially mitigate the deterioration in economic conditions.”
Lower inflation levels also contributed to its GDP forecast cut.
In a joint statement responding to the estimates, Schumer and Independent Vermont Sen. Bernie Sanders called on Republican Minority Leader Sen. Mitch McConnell to acknowledge the need to provide more aid to America’s working families.
“In order to avoid the risk of another Great Depression, the Senate must act with a fierce sense of urgency to make sure that everyone in America has the income they need to feed their families and put a roof over their heads,” Schumer and Sanders wrote. “The American people cannot afford to wait another month for the Senate to pass legislation. They need our help now.”
Another $3 trillion stimulus bill passed the Democratic-controlled House of Representatives and has made its way to the Senate, where the Republican majority has deemed it dead on arrival. McConnell has indicated another relief bill is feasible, but he has said lawmakers need to assess the impact of the CARES Act first.
The CBO noted there is an “unusually high degree of uncertainty” surrounding its forecast, given the unprecedented nature of the pandemic and the government’s responses – in addition to the uncertainty surrounding how the economy will respond moving forward. It is also not known what legislation could be enacted moving forward and if there will be large-scale future domestic outbreaks of the virus.