The final financial toll of the coronavirus will likely be a reduction of $7.9 trillion to the U.S. gross domestic product (GDP) until 2030, the Congressional Budget Office said Monday (June 1), according to CNBC.
That number includes the rescue funding approved thus far by Congress, which has numbered in the multi-trillions, with aid going to businesses, individuals and services like testing.
CBO Director Phillip L. Swagel, in a written response to Sen. Chuck Schumer’s inquiry, said the downturn is likely to come from the closings of businesses and social distancing measures, which will force people to spend less time out shopping. Unemployment rates skyrocketing above 14 percent since the pandemic hit in March will add to consumers’ reluctance to go out and spend, and major cities are still seeing high rates of event cancellations and delinquencies on mortgages and credit card payments.
A recent drop in energy prices will also compound on those factors, making it hard for U.S. businesses to invest in that sector.
However, Swagel said the recent legislation passed, including the CARES and HEROES acts, could work to mitigate the overall harm to the economy.
Those acts have worked to pump money into the pockets of individuals, small businesses and aid provisions for extra personal protective equipment (PPE) and testing for hospitals and local governments.
Schumer has said the CBO’s words only bolster his case for another spending bill to continue stimulating the economy.
“In order to avoid the risk of another Great Depression, the Senate must act with a fierce sense of urgency to make sure that everyone in America has the income they need to feed their families and put a roof over their heads,” Schumer said in a statement, as reported by CNBC.
The CBO’s projections could change further, CNBC reported, as the trajectory of the coronavirus becomes more apparent, along with whatever impact can be credited to congressional funding measures and the ultimate financial damage the virus does.