The economic impact of the COVID-19 pandemic in the United States has been largely disruptive, adversely affecting travel, financial markets, employment, shipping, and other industries. It has also led to many economically affecting choices made by the government of the United States.
In May 2020, the Congressional Budget Office (CBO) summarized the ongoing and expected economic impact:[citation needed]
- The unemployment rate increased from 3.5% in February to 14.7% in April 2020, representing a decline of more than 25 million people employed, plus another 8 million persons that exited the labor force.
- Job declines were focused on industries that rely on “in-person interactions” such as retail, education, health services, leisure and hospitality. For example, 8 of the 17 million leisure and hospitality jobs were lost in March and April 2020.
- The economic impact was expected to hit smaller and newer businesses harder, as they typically have less financial cushion.
- Real (inflation-adjusted) consumer spending fell 17% from February to April 2020, as social distancing reached its peak. In April, car and light truck sales were 49% below the late 2019 monthly average. Mortgage applications fell 30% in April 2020 versus April 2019.
- Real GDP was forecast to fall at a nearly 38% annual rate in the second quarter, or 11.2% versus the prior quarter, with a return to positive growth of 5.0% in Q3 and 2.5% in Q4 2020. However, real GDP was not expected to regain its Q4 2019 level until 2022 or later.
- The unemployment rate was forecast to average 11.5% in 2020 and 9.3% in 2021.[5]
The CBO also forecast in August 2020 that the federal budget deficit in fiscal year 2020 would be $3.3 trillion (16.0% GDP), versus the January estimate of $1 trillion (4.6% GDP). This represents the largest annual deficit since 1945. This increase reflects relief legislation such as the CARES Act, tax revenue declines due to reduced economic activity, and automatic stabilizer spending for unemployment compensation.[6
