The US economy is bouncing back from the COVID-19-induced downturn quicker than expected and is on its way to regain all jobs lost during the pandemic by mid next year, partly as a result of enormous federal spending that will push the budget deficit to $3 trillion for fiscal 2020-21 (October 1, 2020-September 30, 2021), the Congressional Budget Office (CBO) announced recently.
Despite warnings by many quarters that runaway inflation from all stimulus package spending could cripple the economy, the US administration reinforced its view that inflation poses little threat to the recovery and the budget office predicted that a recent spike in prices for cars, airline tickets and other products would be temporary and start receding this year.The economy is bouncing back from the COVID-19-induced downturn in the United States quicker than expected and is on its way to regain all jobs lost during the pandemic by mid next year, partly as a result of enormous federal spending that will push the budget deficit to $3 trillion for fiscal 2021, the Congressional Budget Office announced recently.#
Downplaying the deficit projections and focusing on economic growth predictions, government officials reportedly said the strong numbers validate President Joe Biden’s push to douse the economy in stimulus.
The budget office predicted the economy would grow by 6.7 per cent for the year, after adjusting for inflation—the fastest annual growth in the country since 1984 and much faster than the independent projections early this year by the budget office and the US administration.
The rate of unemployment is also likely to fall below 4 per cent next year and remain historically low for years to come, signaling a significant acceleration in job gains from what the office predicted in February. CBO has then said that unemployment would not fall below 4 per cent until 2026.
Budget office officials said the uptick in growth and employment forecasts stemmed in large part from aggressive government stimulus. But the economy is also benefiting from consumers, who are rapidly spending savings they built up during the pandemic.
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