US economic slowdown to normalise in mid-2021 after the pandemic, says budget office
- Unemployment rates are likely to take longer before recovering
- The US suffered its worst economic slowdown after World War II
- A $4 trillion package passed by the US Congress will assist the US economy in recovering
The US Congressional Budget Office (CBO) on Monday predicted that the country’s economic standing will overcome the deep dent made during the pandemic which gained substantial pace in 2020.
The COVID-19 pandemic triggered a series of mass lockdowns all over the country and caused many local businesses to terminate their functions and spiked unemployment, which is estimated to have a longer recovery period.
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The office said in a statement, “CBO currently projects a stronger economy than it did in July 2020, in large part because the downturn was not as severe as expected and because the first stage of the recovery took place sooner and was stronger than expected. In CBO’s projections, the unemployment rate gradually declines through 2026, and the number of people employed returns to its pre-pandemic level in 2024.”
The United States, which is the worst affected country in the pandemic, struggled with its most severe economic slowdown since 1946.
A stimulus package worth $4 trillion was passed by the US Congress which aimed at providing financial assistance to small businesses and individuals during the country’s strained economic period.
According to the country’s budget office, a 1.5% increase in the GDP is expected this year and next and provide an additional $872 billion for the economic deficit as a result of a $900 billion measure passed in December.
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Over the long term, CBO expects the US economy to climb by an average of 1.6% a year between 2026 and 2031.
The office also estimated that before raising the borrowing rates in a gradual manner, the Federal Reserve is expected to maintain them at near-zero through mid-2024.
Inflation in the US is expected to breach the 2% mark — when the central bank stated it would consider increasing the rates — after 2023.
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