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CBO predicts a dark future for the US economy

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Miguel A. Rodriguez
Miguel A. Rodriguez
14 September 2020
The next decade will be of decline for the US economy

Earlier this year, the Congressional Budget Office (CBO), released its forecast regarding the American economy for the next couple of years.  At that time, the report showed a severe contraction of the economy. But, as of yesterday, the CBO revised its forecast, and it showed the impact the pandemic had over the economy. The economic growth is to stagnate for about ten years.

The US economy could be under the $15.7 trillion threshold in the next decade, this being the best-case scenario if Congress finds a way to handle the damages of the novel virus.

For this year, the GDP contracted by 5% during the first quarter. During the second quarter, the GDP will drop by 37.7% - the most significant quarterly drop ever recorded.  The unemployment rate for May is to reach 20%, the highest rate since the Great Depression. According to the latest data, between 2020-2030, the GDP output could drop by 5.3%. After adjusting the inflation, the loss would be 3% ($7.9 trillion).

From the CBO point of view, if a new economic relief bill gets the Senate's approval, the economic deterioration could be kept under control, and the risk of another Great Depression could be avoided. Still, the Republicans dismissed the idea of a new stimulus, and they considered it to be just wishful thinking.

The American benchmarks were immune to the forecasts and ended the day with gains: USA30 went up 0.39%. USA500 added 0.42%, while TECH100 gained 0.65%. 

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Sources: cncb.com, economictimes.indiatimes.com

This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.