"With current spending levels, virtually unchanged revenue and no additional bailouts, the federal deficit will be about $ 3,700 billion for fiscal 2020 and $ 2,100 billion for next fiscal year," The Office of Congressional Budget (CBO) said in its report yesterday (April 24). Last month, their forecast for both years was just over $ 1,000 billion.

The agency also forecasts US GDP decline by nearly 40% in the second quarter compared to the same period last year. However, the economy will rebound in the second half of the year. Unemployment will peak at 16% and remain at double digits throughout 2021.

Federal fiscal 2020 debt will be equal to 101% of GDP and to 108% next year. Real GDP this year will fall by 5.6%, then increase again to 2.8% in 2021. In January, CBO also forecast that the economy will prosper until the end of the year, thanks to strong consumption.

The CBO report shows pressure on US congressmen when they have to come up with new policies to deal with a pandemic. To date, the US Congress has approved a total of $ 3,000 billion in spending on health, small businesses and other measures to prevent pandemics and economic impacts.

However, the CBO report is more optimistic than many other economic experts. William Hoagland, deputy director of Bipartisan Policy Center, said that the economy will recover at a slower pace than CBO’s forecast for the second half of this year.

The budget deficit will also exceed USD 4,000 billion if additional stimulus policies are likely to be implemented. He said that the next fiscal challenge for parliamentarians is how to "reduce debt levels and post-crisis deficits without significant inflationary pressures".