Two pieces of information this week should provide hope that the United States could be turning the corner on the COVID-19 virus – one highlighting U.S. COVID case data and the other U.S. economic data.
According to the Centers for Disease Control and Prevention (CDC), beginning with the second week in January (Jan. 10) most states began reporting a significant drop in the number of new COVID cases. This trend continued through the end of January and into February. In addition, more states seem to be doing a better job of getting COVID-19 vaccines into the arms of our colleagues and patients. While the total number of COVID-19 cases and deaths are far higher than any of us would have liked, we should take some comfort that the numbers are going in a downward direction.
Although the second piece of news has not received as much national attention as the COVID case load improvements, it is equally positive.
Twice a year the non-partisan Congressional Budget Office (CBO) produces their economic outlook for the U.S. economy. On Monday, February 1, the CBO released its newest report,and there was a lot of good news. Of note, these projections were done without any additional stimulus funds being appropriated by Congress.
Key highlights of the report are:
- The CBO expects the U.S. Gross Domestic Product (GDP) to return to its pre-pandemic size by June or July of this year and the labor force is forecast to rebound to its prepandemic level in 2022, the CBO said.
- The CBO projects the unemployment rate will fall to 5.3% in 2021 (currently at 6.7%) and to 4% between 2024 and 2025.
- CBO expects Real GDP to grow 3.7% in 2021.
- According to the CBO analysts, GDP growth will average 2.6% over the next five years.
- Inflation is expected to rise to 2% after 2023.
- The Federal Reserve will likely start hiking the federal funds rate in mid-2024.
- CBO has upgraded the nation’s economic outlook through 2025.
The CBO said it upgraded its estimates “because the downturn was not as severe as expected and because the first stage of the recovery took place sooner and was stronger than expected.”
CBO staff added that many businesses proved more able to adapt to government-imposed restrictions.
However, CBO noted that certain industries — in particular, hospitality and food services — are still struggling.
We will continue to monitor and report on issues as they unfold in Washington – the Advocacy Council – we have you covered.