US deficit expected to reach nearly $4 Trillion

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by Karen Faulkner, Worthy News Correspondent

(Worthy News) – The US Congressional Budget Office (CBO) predicted on Friday that, as a result of the COVID-19 pandemic, America’s deficit will reach $3.7 trillion this year, Politico reports. The CBO also said that unemployment will rise to 16 percent in 2020, before going to down to 9.5 percent by the end of 2021.

Lawmakers have enacted four separate coronavirus relief bills for a total of over $2.7 trillion, an amount that will heavily impact the federal deficit. The CBO’s overall forecast was made without accounting for any future coronavirus relief bills. The forecast was also made after the number of people claiming unemployment benefit reached 26 million.

Politico reports the CBO anticipates federal debt held by the public will be 101 percent of GDP by the end of the fiscal year. Real GDP is expected to fall by 11.8 percent in the second quarter; the economy is projected to shrink by 5.6 percent this year, before growing by 2.8 percent in 2021.

Nevertheless, the economy should see an improvement from the third quarter of this year, the CBO said. The improvement would be a result of increased economic activity “as concerns about the pandemic diminish and state and local governments ease stay-at-home orders, bans on public gatherings, and other measures …”

The CBO added that the projected figures “are subject to enormous uncertainty “during the pandemic. Moreover, the CBO said: “The agency’s projections also include the possibility of a re-emergence of the pandemic. To account for that possibility, social distancing is projected to continue, although to a lesser degree, through the first half of next year.”

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