CBO: It Will Take a Decade for U.S. Economy to Recover from COVID-19 Recession

[Frodo]

CBO: A lost decade looms for America's economy

The CBO warns in a new analysis that the pandemic will reduce cumulative economic output over the next 10 years by $7.9 trillion, or 3% of GDP during the decade, compared to its projections from January. Without accounting for inflation, the damage totals $15.7 trillion, or 5.3% of GDP.


The CBO said the revisions reflect expectations of reduced consumer spending caused by business closures and social distancing. In addition, the recent drop in energy prices is expected to "severely" curtail investment in that sector, the CBO warned.

Recent legislation, which includes more than $2 trillion in stimulus, will only partially mitigate the economic fallout caused by the pandemic, the CBO said.

[PSOL]

They’re overestimating our recovery, this is going to haunt us for a long, long time. Perhaps even eclipsing the Great Depression.

[Hope For A New Era]

Oh good, just in time for another Republican to swoop in, take credit for it, and then crash it again.

[Del Tachi]

Eh, it's a downward revision in baseline projections.  Can income never earned really be "lost"?

The CBO estimates are also overly reliant on the idea that social distancing and business closures can be sustained (to some degree) until something like a vaccine is developed.  I think it's become quite obvious (just over the past week) that the concern motivating these restrictions is incredibly fickle.  People are moving on. 

[Orwell]

Eh, it's a downward revision in baseline projections.  Can income never earned really be "lost"?

The CBO estimates are also overly reliant on the idea that social distancing and business closures can be sustained (to some degree) until something like a vaccine is developed.  I think it's become quite obvious (just over the past week) that the concern motivating these restrictions is incredibly fickle.  People are moving on. 

This post really aged like milk in 2 months.

[RINO Tom]

Eh, it's a downward revision in baseline projections.  Can income never earned really be "lost"?

The CBO estimates are also overly reliant on the idea that social distancing and business closures can be sustained (to some degree) until something like a vaccine is developed.  I think it's become quite obvious (just over the past week) that the concern motivating these restrictions is incredibly fickle.  People are moving on. 

This post really aged like milk in 2 months.

I mean, kind of ... the point is that people HAVE moved on, and the appetite for a collective sacrifice via lockdown has dissipated for many people whose livelihoods are being destroyed.  We can sit and judge those people all we want, but the fact remains that a restriction or law is only as good as the number of people who will follow it, and people only follow laws that they deem as reasonable and fair.  We can't change what large numbers of people think.

That is why I think there needs to be less emphasis on vaccines by the experts and more on treatment.  We should be working around the clock to enhance COVID treatment and inching back toward normal economic activity.  That view is not informed by what is best from an epidemiological perspective; it's informed by what I think is realistic.  People who are in their 20s and 30s SHOULD be going out to eat (especially outside ... there is literally almost no risk when outdoors and six feet away from someone) and stimulating our economy, provided they follow guidelines.  However, you have to give a little (freedom) to take a little (restrictions).

[Damocles]

I mean, kind of ... the point is that people HAVE moved on, and the appetite for a collective sacrifice via lockdown has dissipated for many people whose livelihoods are being destroyed.  We can sit and judge those people all we want, but the fact remains that a restriction or law is only as good as the number of people who will follow it, and people only follow laws that they deem as reasonable and fair.  We can't change what large numbers of people think.

That is why I think there needs to be less emphasis on vaccines by the experts and more on treatment.  We should be working around the clock to enhance COVID treatment and inching back toward normal economic activity.  That view is not informed by what is best from an epidemiological perspective; it's informed by what I think is realistic.  People who are in their 20s and 30s SHOULD be going out to eat (especially outside ... there is literally almost no risk when outdoors and six feet away from someone) and stimulating our economy, provided they follow guidelines.  However, you have to give a little (freedom) to take a little (restrictions).

Just one small problem, RINO Tom: Go out, sure... WITH WHAT $&%#ING MONEY?!

[President Johnson]

What generally concerns me is the insane amounts of debt that's being accumulated. And that applies to the US and Europe. Of course, stimulus packages are necessary and I'm not opposed to wise spent stimulus, but it may cause a lasting debt crisis. I mean, most countries are already deep in the red.

[Skill and Chance]

I really don't buy this at all.  Vaccinate enough of the population and the economy should more or less pick up where it left off in late 2019.  This isn't a credit crisis where it takes years to rebuild trust between counterparties.  When the disease is gone, people with means immediately go out and party and hire other people to host the parties/shows/conferences/serve the food/etc.

[jaichind]

Latest projections are 2021 USA real GDP should be slightly above or equal to 2019 USA real GDP.  So really the "loss" is two years of growth.  The main problem is the surge in debt which I guess in the short run is being monetized.  I think another big issue is a lot of economic trends are being accelerated by this crisis and it is clear the economic impact by sector and region are very uneven so there will be a lot of economic churn in the near future.

[World politics is up Schmitt creek]

The main problem is the surge in debt which I guess in the short run is being monetized.

I mean, there are also problems like ~19m people, including multiple members of my extended family, currently being nine days away from homelessness in the deep midwinter during a highly contagious viral pandemic, but I respect that you and your Scarsdale buddies have more important things to worry about.

[jaichind]

From a net debt point of view if you look at current IMF data and projections, the net debt to GDP for USA as of 2007 was around 45%.  After the 2007-2008 financial crisis it mostly stabilized around 83% of GDP in the 2011-2019 period.  The 2020 COVID-19 shock seems have the debt surging to around 110% of GDP by 2025.  So in many ways while the surge of net debt to GDP is large but the 2019-2025 rise is not as large as the 2007-2012 period.  In absolute terms 110% net debt to GDP is very large and is around where Greece was BEFORE the 2007-2008 crisis.  So I guess we will be one more crisis away from becoming Greece with the safety net that we get to print our own currency.

[Cassius]

From a net debt point of view if you look at current IMF data and projections, the net debt to GDP for USA as of 2007 was around 45%.  After the 2007-2008 financial crisis it mostly stabilized around 83% of GDP in the 2011-2019 period.  The 2020 COVID-19 shock seems have the debt surging to around 110% of GDP by 2025.  So in many ways while the surge of net debt to GDP is large but the 2019-2025 rise is not as large as the 2007-2012 period.  In absolute terms 110% net debt to GDP is very large and is around where Greece was BEFORE the 2007-2008 crisis.  So I guess we will be one more crisis away from becoming Greece with the safety net that we get to print our own currency.

Pretty big safety net in all fairness. Especially since in the Greek case its undoubted problems were made dramatically worse by its membership of the Eurozone.

Also, worth pointing out the other safety net, ie the huge numbers still invested in treasuries as the safest of safe assets, quite unlike Greek government bonds well... ever. I suspect if we ever get to a stage where investors refuse to buy/rollover treasuries then the whole world, not just the US, will be f*****.