The U.S. Congressional Budget Office has projected that the coronavirus crisis will cost the U.S. economy about $8 trillion. Many factors play a part in shrinking the economy, such as business closures, social distancing measures, consumer spending, a drop in energy prices, and recent legislation.
Decade-Long Recovery Costing $8 Trillion
The U.S. Congressional Budget Office (CBO), a federal agency that provides budget and economic information to Congress, has estimated the impact of the coronavirus crisis on the U.S. economy. CBO Director Phillip L. Swagel explained on Monday in a letter to Democratic Senator Chuck Schumer:
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.
Schumer had asked the CBO to compare its “May 2020 interim projections of gross domestic product and its January 2020 baseline projections,” the letter details.
The agency projected in May that the level of nominal GDP in Q2 2020 would be lower than its January forecast. “The two largest differences between the two forecasts result from the economic effects of the covid-19 pandemic in reducing output and the legislation enacted between January and early May in response, which partly offsets that reduction,” Swagel described.