Countries located in different parts of the world are trying to deal with challenges caused by the coronavirus pandemic. It is no secret that millions of people around the globe are looking for a job. According to the Congressional Budget Office (CBO), U.S. economic growth will recover in a short period of time. Moreover, the labour market will return to full strength sooner than expected thanks to the coronavirus vaccine and a barrage of legislation enacted in 2020.
It is worth noting that, gross domestic product, or GDP, is likely to return to its pre-pandemic size by mid-2021. Moreover, the labour market is forecast to rebound to pre-coronavirus level in 2022.
Let’s have a look at the forecast published on Monday. Based on the information provided by the Congressional Budget Office, its rosier projections do not assume any new stimulus, including President Joe Biden’s $1.9 trillion plan. The CBO expects the real GDP to grow by 3.7% in 2021. Moreover, the federal agency also expects GDP growth to average at 2.6% over the next five years.
According to the forecast published this week, the agency expects the unemployment rate to fall to 5.3% in 2021 and further to 4% between 2024 and 2025.
Moreover, the CBO anticipates that inflation will rise to 2% after 2023. Furthermore, the federal agency also expects the Federal Reserve to start hiking the federal funds rate in mid-2024. Also, the forecast published on Monday includes an upgraded economic outlook through 2025. People should take into consideration that these projections are a stronger outlook than the budget office’s prior forecast from summer 2020.
Labour market and positive information
As stated above, millions of people lost their jobs due to coronavirus pandemic. Unfortunately, some of them are still out of work and this fact underlines the severity of the problem. However, the labour market will recover in 2022, according to the CBO.
Based on the information provided by the Congressional Budget Office, it upgraded its estimates because the downturn was not as severe as expected. Moreover, the first state of the recovery took less time and was stronger than expected.
Interestingly, the CBO staff added that businesses proved more able to adapt to government-imposed restrictions. However, certain industries, such as hospitality and food services, are still struggling to cope with problems. It is not surprising as it would take time to revive the tourism industry. In some cases, it could take several years to deal with all challenges.