The Congressional Budget Office has released estimates on the damage the coronavirus will have inflicted on the U.S. economy, and they aren’t pretty.
According to CNBC:
The coronavirus likely will sap about $7.9 trillion of economic activity over the next decade-plus even with all of the rescue funding being poured in to offset the pandemic’s impact, according to a government estimate Monday.
Through fiscal 2030, the virus will reduce real economic output — nominal GDP adjusted for inflation — by 3% from initial economic estimates in January before the pandemic hit, the CBO said.
“Business closures and social distancing measures are expected to curtail consumer spending, while the recent drop in energy prices is projected to severely reduce U.S. investment in the energy sector,” CBO Director Phillip L. Swagel said in a written response to an inquiry from Sen. Chuck Schumer, D-N.Y. “Recent legislation will, in CBO’s assessment, partially mitigate the deterioration in economic conditions.”
Nominal GDP is expected to be $15.7 trillion, or 5.3%, less than originally forecast due to the coronavirus.
The responsibility for the decline is almost split between the virus itself, and the response to it.
A large chunk of the economic damage would’ve happened regardless as people modified their behavior in response to the pandemic without government intervention – but strict lock-downs did exacerbate the damage.
A team of economists from Indiana University have found that about 40% of the decline in employment between March and April was driven by the COVID-19 pandemic and about 60% of the decline was driven by state social distancing policies.
While most were on board when the narrative was that we had “fifteen days to flatten the curve” – the nation’s tune has changed once fifteen days turned into over two months of house arrest (unless you’re a rioter, of course).