February 1, 2021
Highlights of the CBO Economic Outlook
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.
- 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.