Coronavirus could hit US economy by $15.7 trillion, Congressional Budget Office projects

‘In order to avoid the risk of another Great Depression, the Senate must act with a fierce sense of urgency,’ say Democratic senators Bernie Sanders and Chuck Schumer

CBO director Philip Swagel ((2020 Getty Images))

The US economy’s gross domestic product (GDP) is predicted to be $15.7 trillion (£12.5 trillion) smaller over the next ten years, than previously predicted, due to the effects of the coronavirus pandemic, according to the Congressional Budget Office (CBO).

The agency announced on Monday that unless Congress attempts to mitigate the damage caused by the pandemic, the US economy will be severely hit over the long term, The Week reports.

In a letter sent to Democratic senator Bernie Sanders and Senate minority leader, Chuck Schumer, CBO director Philip Swagel said that the figure is a significant shift from previous estimations, due to the effect of the virus on the US economy.

Mr Swagel added that it is not just a lack of consumer spending that will influence the GDP, but a fall in energy prices and a lack of investment in numerous sectors.

“Business closures and social distancing measures are expected to curtail consumer spending, while the recent drop in energy prices is projected to severely reduce US investment in the energy sector,” he wrote.

The CBO director added that legislation, including coronavirus stimulus aid, aimed at helping Americans affected by the virus, will help stop the current projections becoming reality.

“Recent legislation will, in CBO’s assessment, partially mitigate the deterioration in economic conditions,” Mr Swagel said.

Mr Sanders and Mr Schumer said that the announcement is the latest bit of bad news for American workers, and added that the Senate needs to do more to mitigate the predicted deterioration of the economy.

“Last week we learned that over 40 million Americans lost their jobs as a result of this horrific pandemic,” the senators said in a joint statement.

“Today, the CBO tells us that if current trends continue, we will see a jaw-dropping $16 trillion reduction in economic growth over the next decade.”

The Democratic senators urged the Senate to immediately stop blocking economic relief legislation, which would help 40 million Americans who are out of work due to the pandemic.

“In order to avoid the risk of another Great Depression, the Senate must act with a fierce sense of urgency,” Mr Schumer and Mr Sanders said.

According to a tracking project hosted by Johns Hopkins University, there are now more than 1.8 million people who have tested positive for coronavirus in the US and at least 105,147 deaths.