AAF’s Director of Fiscal Policy Gordon Gray breaks down the key points of the Congressional Budget Office’s (CBO) newly released An Overview of the Economic Outlook: 2021 to 2031. The analysis is particularly timely, as policymakers are considering the size and scope of another potential COVID-19 fiscal intervention, Gray notes.

Highlights:

• According to CBO’s projections, unemployment will return to below 4 percent within the decade, though it is not estimated to return to levels seen prior to the pandemic;
• CBO forecasts a gross domestic product gap of $808 billion over the period 2021-2025, less than half the size of the most prominent fiscal response package currently under consideration on Capitol Hill; and
• CBO projects that the economy will remain below potential until 2025 – at which point the agency forecasts that real GDP will exceed potential GDP until 2029.

Read the analysis.