Interim Economic 

Projections for 

2020 and 2021

MAY 2020

CONGRESS OF THE UNITED STATES

CONGRESSIONAL BUDGET OFFICE

 Projected

Percent

0

4

8

12

16

1980 1985 1990 1995 2000 2005 2010 2015 2020

Unemployment Rate
At a Glance

The Congressional Budget Office has updated its economic projections through 2021 to 

account for the 2020 coronavirus pandemic. CBO’s latest estimates, which are based on 

information about the economy that was available through May 12, update the preliminary projections that the agency made in April. In developing those projections, CBO 

reviewed many private-sector forecasts. Some of those forecasts include expectations that 

additional pandemic-related legislation will be enacted, whereas CBO’s projections incorporate the assumption that current laws generally remain unchanged and that no significant additional emergency funding is provided. This report details those projections.

• The Pandemic and Social Distancing. The pandemic has profoundly affected the 

lives of millions of people. To mitigate the contagion, many households, businesses, 

and governments have taken measures to limit in-person interactions. Collectively 

referred to as social distancing, those measures include reducing social activities, 

working from home, and closing schools and businesses. CBO estimates that social 

distancing peaked in April 2020 across the country. To account for the chances 

of the pandemic persisting or reemerging, CBO projects that social distancing 

will continue, but to a declining degree. The agency expects that, from that peak, 

social distancing will drop by roughly two-thirds during the second half of this year 

and diminish further, but by smaller amounts, through the third quarter of 2021. 

That decline is in the middle of the distribution of possible outcomes, in CBO’s 

assessment, and allows for regional and seasonal variation.

• The Sudden Drop in Economic Activity. The pandemic and the social distancing 

measures taken to contain it have widely disrupted economic activity, causing a 

wave of job losses and ending the longest expansion since World War II. CBO 

estimates that real (inflation-adjusted) gross domestic product (GDP) will contract 

by 11 percent in the second quarter of this year, which is equivalent to a decline of 

38 percent at an annual rate. In the second quarter, the number of people employed 

will be almost 26 million lower than the number in the fourth quarter of 2019. 

• A Resumption of Economic Activity. The economy is expected to begin recovering 

during the second half of 2020 as concerns about the pandemic diminish and as state 

and local governments ease stay-at-home orders, bans on public gatherings, and other 

measures. The labor market is projected to materially improve after the third quarter; 

hiring will rebound and job losses will drop significantly as the degree of social 

distancing diminishes. However, those improvements will not be large enough to 

make up for earlier losses. Compared with their values two years earlier, by the fourth 

quarter of 2021 real GDP is projected to be 1.6 percent lower, the unemployment 

rate 5.1 percentage points higher, and the employment-to-population ratio 

4.8 percentage points lower. Inflation and interest rates on federal borrowing will 

remain relatively low because of subdued economic activity and weak labor market 

conditions through 2021.

www.cbo.gov/publication/56351
Contents

Visual Summary 1

The Pandemic and Current Economic Conditions 3

The Labor Market 3

Gross Domestic Product 4

Legislative and Other Actions 5

Effects of Recent Legislation 6

Economic Projections for 2020 and 2021 7

Gross Domestic Product 8

The Labor Market 12

Inflation 16

Interest Rates 17

Some Uncertainties in CBO’s Economic Projections 18

The Course of the Pandemic 18

The Pandemic and the Economy 18

Effects of Recent Fiscal and Monetary Policy Actions 19

The Reporting of Data 19

Comparison With Other Economic Projections 20

List of Tables and Figures 22

About This Document 23
Notes

Unless this report indicates otherwise, all years referred to are calendar years and all 

quarters are calendar quarters. 

Numbers in the text, tables, and figures may not add up to totals because of rounding. 

In most years, the Congressional Budget Office releases two economic projections, usually 

associated with updated baseline budget projections. Typically, those two economic 

projections are released in January and August. The agency’s most recent full economic 

forecast was released with the baseline budget projections on January 28, 2020. Because 

the 2020 coronavirus pandemic has substantially disrupted economic activity, CBO 

updated projections for the several variables that are most important for producing 

accurate cost estimates for recent legislation. This report updates the two-year (2020 

and 2021) preliminary economic projections that were made in April (see www.cbo.gov/

publication/56335 and www.cbo.gov/publication/56314).

Supplemental data for this analysis are available on CBO’s website (see www.cbo.gov/

publication/56351). As part of those data, CBO projected a selected set of macroeconomic 

variables (including gross domestic product, the unemployment rate, various price 

indexes, and key interest rates) through 2030 for use in estimating the budgetary effects of 

proposed legislation. Later this year, CBO will publish a comprehensive economic forecast 

through 2030. The supplemental material accompanying that forecast will include the 

set of variables CBO usually publishes, including estimates of potential output and the 

natural rate of unemployment. CBO’s most recent versions of those series were published 

in January; see www.cbo.gov/publication/51135. 

Also available on CBO’s website are a glossary of common budgetary and economic 

terms (see www.cbo.gov/publication/42904) and a description of how CBO prepares its 

economic forecast (see www.cbo.gov/publication/53537). 
Interim Economic Projections for 2020 and 2021

Visual Summary

The Congressional Budget Office has updated its economic projections through the end of 2021 to account for the 

2020 coronavirus pandemic. This report details those projections.

The Sudden Drop in 

Economic Activity

The pandemic has disrupted the lives of millions of people. To mitigate the contagion, many 

households, businesses, and governments have taken measures collectively referred to as 

social distancing, which peaked in April 2020. The pandemic and social distancing have widely 

disrupted economic activity, causing a wave of job losses and ending the longest expansion since 

World War II.

The Unemployment Rate

Percent

 Projected

0

4

8

12

16

1980 1985 1990 1995 2000 2005 2010 2015 2020

See Figure 3 on page 15

Between February and April 

of this year, the number of 

people employed fell by 

more than 25 million and 

the size of the labor force 

by more than 8 million. 

In CBO’s projections, the 

unemployment rate is 

15.8 percent in the third 

quarter of this year. After 

that, labor market conditions 

gradually stabilize and begin 

to improve more materially.
2 INTERIM ECONOMIC PROJECTIONS FOR 2020 AND 2021 MAY 2020

A Resumption of 

Economic Activity

The economy is expected to begin recovering during the second half of 2020 as concerns about 

the pandemic diminish and as state and local governments ease restrictions. The labor market 

is projected to materially improve after the third quarter—hiring will rebound and furloughs will 

drop significantly as the degree of social distancing diminishes. To account for the chances of 

the pandemic persisting or reemerging, CBO projects that social distancing will continue, but to 

a declining degree. The persistence of social distancing will keep economic activity and labor 

market conditions suppressed for some time.

Real Output Measured as the Difference From the Fourth Quarter of 2019

Percent

 Projected

−14

−12

−10

−8

−6

−4

−2

0

Q4 Q1

2020

Q2 Q3 Q4 Q1

2021

Q2 Q3 Q4

See Figure 2 on page 9

Although economic 

conditions are projected 

to improve following their 

sudden drop, real output is 

expected to be 1.6 percent 

lower in the fourth quarter of 

2021 than it was in the fourth 

quarter of last year . . . 

Interest Rates

Percent

 Projected

0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2016 2017 2018 2019 2020 2021

3-Month 

Treasury Bills

10-Year 

Treasury Notes

See Figure 5 on page 18

. . . and interest rates 

are expected to remain 

low because of subdued 

economic activity, weak labor 

market conditions, actions 

taken by the Federal Reserve, 

and an increase in investors’ 

demand for low-risk assets.
May 2020 INTERIM ECONOMIC PROJECTIONS FOR 2020 AND 2021 3

The Pandemic and 

Current Economic Conditions

The 2020 coronavirus pandemic has profoundly affected 

people in the United States and around the world. Many 

households, businesses, and governments have implemented social distancing measures—such as working 

from home, closing schools and businesses, and limiting 

social gatherings—to slow the spread of COVID-19, the 

disease caused by the coronavirus. 

Since the beginning of March of this year, the number 

of reported cases of and deaths from COVID-19 in the 

United States has risen rapidly. The measures taken to 

impede the transmission of the virus have caused many 

businesses, especially those in the service sector, to curtail 

operations or to close altogether. Those measures have 

adversely affected manufacturing as well, by disrupting 

supply chains and decreasing demand for goods. The 

pandemic-related disruptions to economic activity have 

ended the longest expansion since World War II and 

have precipitated an acute deterioration in labor market 

conditions.1 In response, policymakers have taken many 

actions to support the economy.

The Labor Market

The pandemic and associated social distancing measures 

have led to a collapse in consumer spending and caused 

many businesses to reduce or cease operations and to lay 

off or furlough their employees. Between the third week 

of March and the first week of May, more than 30 million unemployment insurance claims were filed. The 

unemployment rate surged from 3.5 percent in February 

to 14.7 percent in April.2 That change reflects the net 

effect of a decline of more than 25 million in the number 

1. The end of an expansion marks the beginning of a recession. The 

National Bureau of Economic Research is responsible for dating the 

peaks and troughs of the business cycle. According to its Business 

Cycle Dating Committee, a recession is “a significant decline in 

economic activity spread across the economy, lasting more than a 

few months, normally visible in real (inflation-adjusted) GDP, real 

income, employment, industrial production, and wholesale-retail 

sales.” For further discussion, see National Bureau of Economic 

Research, Business Cycle Dating Committee, “The NBER’s 

Recession Dating Procedure” (January 7, 2008), www.nber.org/

cycles/jan08bcdc_memo.html.

2. The unemployment rate is the number of jobless people who are 

available for work and either seeking work or expecting to be recalled 

within six months from a temporary layoff, expressed as a percentage 

of the labor force. The size of the labor force is the number of people 

age 16 or older in the civilian noninstitutionalized population who 

are either working or unemployed.

of people employed and a reduction of more than 8 million in the size of the labor force. 

The effects of the pandemic and economic shocks have 

not been uniform across industries, regions, or businesses 

of varying sizes. During March and April, more than 

20 million nonfarm payroll jobs were lost; those losses 

were concentrated in industries that rely on a high degree 

of in-person interactions, such as leisure and hospitality, retail trade, and education and health services.3

 The 

leisure and hospitality sector was hit particularly hard, 

losing 8 million of its 17 million jobs in March and April 

(see Figure 1). In addition, many local economies that 

rely heavily on the tourism and hospitality industries have 

sustained great employment losses. More broadly, the 

impact of the pandemic has varied greatly across regions, 

and some states have been hit harder than others. Across 

all industries and all regions, though, businesses that are 

small and young are expected to suffer a greater share of 

job losses than are larger and more mature businesses, 

because smaller and newer businesses are less likely to 

have the financial resources to withstand the shocks.

The Bureau of Labor Statistics (BLS), which publishes the 

unemployment rate and other labor statistics each month, noted 

that the April unemployment rate probably understated the 

share of unemployed workers in the labor force because many 

workers who should have been classified as “unemployed on 

temporary layoff” were probably misclassified as “employed absent 

from work” in the Current Population Survey. A BLS analysis 

of the underlying data suggests that, had that misclassification 

not occurred, the April unemployment rate would have been 

nearly 5 percentage points higher. For more details, see Bureau 

of Labor Statistics, “Frequently Asked Questions: The Impact of 

the Coronavirus (COVID-19) Pandemic on the Employment 

Situation for April 2020” (May 8, 2020), https://go.usa.gov/

xvM73 (PDF, 300 KB). 

3. Two estimates of employment are commonly used. One comes 

from the establishment survey of employers (the Department of 

Labor’s Current Employment Statistics Survey), which measures 

employment as the estimated number of nonfarm wage and 

salary jobs. (In that survey, a person with more than one job may 

be counted more than once.) The other estimate comes from 

the household survey (the Census Bureau’s Current Population 

Survey), which measures employment as the estimated number of 

people employed. (In that survey, someone with more than one 

job is counted only once.) The establishment survey covers only 

people on the payrolls of nonagricultural establishments, whereas 

the broader household survey includes self-employed workers, 

agricultural workers, unpaid workers in family-owned businesses, 

and employees of private households. However, the household 

survey is based on a smaller sample than the establishment survey 

is, so it yields a more volatile estimate of employment.
4 INTERIM ECONOMIC PROJECTIONS FOR 2020 AND 2021 May 2020

The suffering inflicted by the pandemic and economic 

shocks has also varied significantly among workers. Lowwage workers and low-income families have borne the 

brunt of the economic crisis, in part because the industries hardest hit by the pandemic and social distancing 

measures disproportionately employ low-wage workers. 

Furthermore, workers who are younger, female, have less 

education, and are from certain racial or ethnic groups 

have seen disproportionately large job losses. Although 

employment between February and April declined by 

16 percent overall, it decreased by 31 percent for people 

ages 16 to 24, by 18 percent for women regardless of 

age, by 19 percent for people age 25 or older without a 

bachelor’s degree, and by 21 percent for Hispanic workers regardless of age. Among black workers, employment 

declined by 18 percent. Also, black and Hispanic people 

constitute a disproportionate share of workers in certain 

industries in which many jobs involve elevated risks of 

exposure to COVID-19.4

4. In 2019, 12 percent of workers were black and 18 percent 

were Hispanic. However, more than a fifth of workers in these 

industries were black: nursing care, residential care, bus service 

and urban transit, the Postal Service, couriers and messengers, 

Gross Domestic Product

Real (inflation-adjusted) consumer spending—which 

accounts for about two-thirds of gross domestic product 

(GDP)—plunged 7.3 percent in March as a result of 

reduced demand for goods and services and businesses’ 

limiting operations or closing. That average measure for 

March as a whole understates the extent of the decline 

in spending from the pandemic and social distancing 

measures because activity was disrupted mostly during 

the later part of the month. Most states ordered businesses to close and people to stay home during the last 

two weeks of March, which greatly curtailed consumer 

spending. Using daily data on household transactions, 

the Bureau of Economic Analysis (BEA) estimates that, 

over the period from March 21 to March 31, when many 

social distancing measures were in place, spending may 

have been down by almost 28 percent as a result of the 

and warehousing and storage. Similarly, more than a fifth 

of workers in these industries were Hispanic: grocery stores, 

warehousing and storage, waste management and remediation, 

and construction. For details, see Bureau of Labor Statistics, 

“Labor Force Statistics From the Current Population Survey” 

(January 22, 2020), www.bls.gov/cps/cpsaat18.htm.

Figure 1.

Job Losses by Industry During March and April 2020

*

Federal Government *

Utilities

Mining and Logging

Information

Financial Activities

Wholesale Trade

Manufacturing, Nondurable Goods

Educational Services

Transportation and Warehousing

Manufacturing, Durable Goods

Construction

State and Local Government

Other Services

Health Care and Social Assistance

Retail Trade

Professional and Business Services

Leisure and Hospitality

0 1 2 4 6 8 10

Millions of Jobs

0 10 20 30 40 50 60

Losses as a Percentage of Jobs

in the Industry in February 2020

Federal Government

Utilities

Mining and Logging

Information

Financial Activities

Wholesale Trade

Manufacturing, Nondurable Goods

Educational Services

Transportation and Warehousing

0 1 2 4 6 8 10

0 10 20 30 40 50 60

Losses as a Percentage of Jobs

in the Industry in February 2020

The more than 20 million 

nonfarm payroll jobs lost 

during March and April were 

concentrated in industries 

that rely on a high degree 

of in-person interactions, 

including leisure and 

hospitality, retail trade, 

and educational services. 

The leisure and hospitality 

industry was hit particularly 

hard, losing more than 

8 million of its 17 million jobs.

Sources: Congressional Budget Office; Bureau of Labor Statistics.

* = between -0.05 million and 0.05 million.
May 2020 INTERIM ECONOMIC PROJECTIONS FOR 2020 AND 2021 5

pandemic; spending on accommodations and restaurants 

declined by 60 percent to 80 percent; and spending 

for some goods (such as clothing) dropped by similar 

amounts.5 However, people spent additional money 

earlier in the month stockpiling items, such as groceries 

and cleaning supplies, in anticipation of those social 

distancing measures. 

The decline in economic activity has been so rapid and 

so recent that the depth of the downturn is still uncertain, and the data on spending are preliminary and 

incomplete. The significant drop in consumer spending 

in March was the primary reason for the contraction in 

real GDP in the first quarter. The Congressional Budget 

Office estimates that real consumer spending declined 

further in April, when social distancing measures reached 

their peak and constrained consumer activity the most; 

compared with spending in February, spending in April 

was down by more than 17 percent.6

The available evidence also implies a sharp decline in 

investment in the second quarter. 

5. In response to the unprecedented pace of change in the economy, 

BEA used newly developed research methods to inform its 

estimates for March. For details, see Aditya Aladangady and 

others, “From Transactions Data to Economic Statistics: 

Constructing Real-Time, High-Frequency Geographic Measures 

of Consumer Spending,” in Katharine Abraham and others, 

eds., Big Data for 21st Century Economic Statistics (University 

of Chicago Press, forthcoming), www.nber.org/books/abra-7. 

Research estimates of spending during March are reported in Abe 

Dunn, Kyle Hood, and Alexander Driessen, Measuring the Effects 

of the COVID-19 Pandemic on Consumer Spending Using Card 

Transaction Data, WP2020-5 (Bureau of Economic Analysis, 

April 24, 2020), https://go.usa.gov/xv6c6. That analysis underlies 

some of BEA’s advance estimates for the entire month of March.

6. To construct its estimate for April, CBO considered the detailed 

components of spending for each category using the decline in 

late March as a guide. Initial inputs to that bottom-up approach 

included various daily and weekly reports covering particular 

retail activities, assorted news reports, and analytic assessments. 

CBO relied on proprietary reports of the daily amount and 

composition of transactions conducted in late March using credit 

and debit cards, as well as information from BEA’s analysis of 

such data and estimates of consumer spending in March. In 

particular, CBO used estimates of the “pandemic effect,” which 

are based only on transactional data for late March, taken from 

Abe Dunn, Kyle Hood, and Alexander Driessen, Measuring 

the Effects of the COVID-19 Pandemic on Consumer Spending 

Using Card Transaction Data, WP2020-5 (Bureau of Economic 

Analysis, April 24, 2020), https://go.usa.gov/xv6c6.

• In the week ending May 8, the number of active 

rigs drilling for oil and gas in the United States was 

54 percent below its average in the fourth quarter 

of 2019.

• The architectural billings index, a leading indicator of 

construction activity, fell at a record pace in March. 

• Construction employment decreased by nearly 

13 percent in April. 

• Sales of cars and light trucks, about half of which 

are made to businesses and constitute a significant 

portion of investment in equipment, fell by 

49 percent in April from their average in the fourth 

quarter of 2019. 

• Mortgage purchase applications, a measure of the 

demand for new and existing homes, were 30 percent 

lower in April than they were a year earlier.

Recent data also suggest a rapid decline in flows of exports 

and imports since the end of February. Trade in travel 

services (a category that includes air travel and hotel 

accommodations) has been greatly reduced by the pandemic. As a result of widespread restrictions on international travel, exports and imports of travel services shrank 

by 45 percent and 64 percent, respectively, during March. 

Exports and imports of goods also contracted. Exports of 

motor vehicles and parts declined by 18 percent in March, 

and exports of petroleum products fell by 13 percent. 

Imports of consumer goods (excluding food and automotive goods) and motor vehicles and parts were particularly 

weak in March, falling by 8 percent. The contractions 

resulted in part from business closures and slowdowns 

caused by health concerns and from a decline in demand 

for goods in the United States and in the countries that 

are its largest trading partners, including Canada, Mexico, 

China, Japan, and the countries of the euro zone. Supply 

chain disruptions impeded trade flows as well.

Legislative and Other Actions

So far this year, policymakers have taken various actions 

in response to the pandemic. Stay-at-home orders, 

bans on public gatherings, travel restrictions, and other 

measures were put in place to protect public health, and 

a number of legislative actions, administrative actions 

(including delayed tax-filing deadlines), and actions 

taken by the Federal Reserve were carried out to address 

the rapid deterioration in economic and labor market 
6 INTERIM ECONOMIC PROJECTIONS FOR 2020 AND 2021 May 2020

conditions. In March and April, four laws were enacted 

to address the public health emergency and to directly 

assist households, businesses, and state and local governments affected by the economic downturn. 

• In combination, the Coronavirus Preparedness and 

Response Supplemental Appropriations Act (Public 

Law 116-123), enacted on March 6, and the Families 

First Coronavirus Response Act (P.L. 116-127), 

enacted on March 18, increased federal funding 

for some federal agencies and for state and local 

governments, required paid sick leave for employees, 

and provided payments and tax credits to employers.7

• The Coronavirus Aid, Relief, and Economic Security 

(CARES) Act (P.L. 116-136), enacted on March 27, 

provided business loans and payments to health care 

providers.8 Among other provisions, it also increased 

payments and tax credits to individuals, provided 

additional funding for state and local governments, 

and reduced certain business taxes. 

• The Paycheck Protection Program and Health 

Care Enhancement Act (P.L. 116-139), enacted on 

April 24, increased federal funding for the business 

loans and payments to health care providers supplied 

in the CARES Act.9

Those laws resulted in a rapid and substantial increase in 

outlays; federal spending in April 2020 doubled relative 

to spending in April 2019. Over that period, the largest changes in outlays stemmed from greater payments 

for refundable tax credits and increases in spending for 

Medicare, the Coronavirus Relief Fund, unemployment 

compensation, and the Provider Relief Fund. Hundreds 

of billions of dollars have also been provided through 

the Paycheck Protection Program (PPP); CBO expects 

7. See Congressional Budget Office, cost estimate for 

H.R. 6201, the Families First Coronavirus Response 

Act (April 2, 2020), www.cbo.gov/publication/56316, 

and cost estimate for H.R. 6074, the Coronavirus 

Preparedness and Response Supplemental Appropriations 

Act, 2020 (March 4, 2020), www.cbo.gov/publication/56227.

8. See Congressional Budget Office, cost estimate for H.R. 748, the 

CARES Act, Public Law 116-136 (April 16, 2020), www.cbo.gov/

publication/56334.

9. See Congressional Budget Office, cost estimate for H.R. 266, the 

Paycheck Protection Program and Health Care Enhancement Act 

(April 22, 2020), www.cbo.gov/publication/56338.

a large portion of those loans to be forgiven, effectively 

making them into grants.

In total, the four pandemic-related laws enacted since 

the beginning of March are projected to increase the 

federal deficit by $2.2 trillion in fiscal year 2020 and by 

$0.6 trillion in fiscal year 2021. Those amounts total 

about 11 percent of nominal GDP in fiscal year 2020 

and 3 percent in fiscal year 2021.

The Federal Reserve has also taken an extraordinary array 

of steps to support the economy. It lowered its target range 

for the federal funds rate—the interest rate that financial institutions charge each other for overnight loans of 

their monetary reserves—to near zero, established several facilities similar to those created during the 2007–

2009 financial crisis to support certain financial markets 

(such as those for securitized lending), and purchased large 

quantities of Treasury and mortgage-backed securities. The 

Federal Reserve established a number of new facilities that 

are partially funded by the Treasury under the CARES 

Act to increase the flow of credit to businesses and to state 

and local governments. The Federal Reserve also made 

temporary adjustments to regulations to allow banks to 

expand their balance sheets to support their household 

and business customers.

Effects of Recent Legislation

CBO’s current-law projections incorporate the economic effects of the laws enacted in March and April in 

response to the pandemic. In CBO’s assessment, that 

legislation will partially mitigate the deterioration in economic conditions. In particular, greater federal spending 

and lower revenues will cause real GDP and employment 

to be higher over the next few years than they would 

be otherwise. The effects of the legislation on economic 

activity will be largest in the second and third quarters of 

2020 and smaller thereafter, CBO projects. 

The recent legislation will affect the economy through 

several channels. For example, the payments and tax 

credits issued to individuals will boost the overall 

demand for goods and services by providing resources 

when many households are experiencing a significant loss 

in income. In addition, federal assistance for state and 

local governments will help pay for rising expenditures 

related to the pandemic as state and local tax revenues 

fall. Loans and grants will provide liquidity to businesses 

experiencing financial distress because of social distancing and the sudden drop in economic activity, increasing 
May 2020 INTERIM ECONOMIC PROJECTIONS FOR 2020 AND 2021 7

the likelihood they will survive and preserve jobs for 

their employees until activity picks back up. And payments to health care providers will help support further 

testing and treatment of COVID-19.

The boost in overall economic activity from the recent 

legislation will be tempered by social distancing, in 

CBO’s assessment, especially during the second and third 

quarters of this year. Continued business closures and 

the reduction in hours worked mean that the supply of 

certain goods and services will remain suppressed. At 

the same time, as people limit their social interactions, 

household and business demand for many goods and 

services will be subdued. Therefore, CBO estimates that 

as long as some degree of social distancing remains in 

place, the economic boost that might be expected from 

recent legislation will be smaller than it would be during 

a period of economic weakness without social distancing. 

CBO expects that some of the spending by individuals 

and businesses that is hampered by social distancing will 

be recovered in the future as stay-at-home orders and 

other interventions start to ease.

Economic Projections for 2020 and 2021

Over the 2020–2021 period, economic activity is 

projected to fall by the greatest amount in the second 

quarter of 2020, because of the pandemic and the social 

distancing measures (see Table 1).10 Real GDP—or real 

output—is projected to pick up during the second half 

of the year, and labor market conditions are expected to 

materially improve after the third quarter as concerns 

10. CBO’s latest economic projections, which are based on 

information about the economy that was available through 

May 12, update the preliminary projections the agency released 

in April. See Congressional Budget Office, “CBO’s Current 

Projections of Output, Employment, and Interest Rates and 

a Preliminary Look at Federal Deficits for 2020 and 2021,” 

CBO Blog (April 24, 2020), www.cbo.gov/publication/56335, 

and “Updating CBO’s Economic Forecast to Account for 

the Pandemic,” CBO Blog (April 2, 2020), www.cbo.gov/

publication/56314.

Table 1.

CBO’s Economic Projections for 2020 and 2021

Percent

2020 Annual Ratea

Actual, 

Q1 Q2 Q3 Q4 2020 2021

Growth of Real GDPb

Since previous quarter -1.2 -11.2 5.0 2.5 n.a. n.a.

Annual rate -4.8 -37.7 21.5 10.4 -5.6 4.2

Growth of Nominal GDP

Since previous quarter -0.9 -11.5 5.1 2.6 n.a. n.a.

Annual rate -3.5 -38.7 22.2 10.9 -5.4 5.7

Inflation

Change in the PCE price index (Annual rate) 1.3 -1.2 1.1 1.3 0.6 1.5

Change in the GDP price index (Annual rate) 1.3 -1.5 0.6 0.4 0.2 1.4

Unemployment Rate 3.8 15.1 15.8 11.5 11.5 9.3c

Interest Rates

3-month Treasury bills 1.1 0.1 0.1 0.1 0.4 0.1

10-year Treasury notes 1.4 0.7 0.8 0.9 0.9 1.0

Sources: Congressional Budget Office; Bureau of Economic Analysis; Bureau of Labor Statistics; Federal Reserve.

GDP = gross domestic product; PCE = personal consumption expenditures; n.a. = not applicable.

a. For growth of real GDP, growth of nominal GDP, and inflation, annual rates are measured from the fourth quarter of one calendar year to the fourth 

quarter of the next. For the unemployment rate and interest rates, annual rates are annual averages.

b. Real values are nominal values that have been adjusted to remove the effects of changes in prices.

c. The value for the fourth quarter of 2021 is 8.6 percent.
8 INTERIM ECONOMIC PROJECTIONS FOR 2020 AND 2021 May 2020

about the pandemic diminish and as state and local 

governments ease stay-at-home orders, bans on public 

gatherings, and other measures. The recently enacted 

laws will contribute to the moderate rebound in economic activity by boosting consumer spending and 

by preserving some connections between workers and 

employers so that firms can ramp up operations more 

quickly as the degree of social distancing subsides. 

Nonetheless, challenges in the economy and in the labor 

market are expected to persist. 

Despite a marked improvement in economic activity by 

the fourth quarter of 2021, real GDP and employment 

are expected to be lower than they were in the fourth 

quarter of 2019 if current laws governing federal taxes 

and spending generally remain in place (see Figure 2). 

Partly because of that gradual and incomplete pattern of 

recovery, interest rates on federal borrowing are expected 

to remain quite low in relation to rates in recent decades 

and inflation is projected to stay below the Federal 

Reserve’s long-run objective in both 2020 and 2021. The 

pattern of the recovery is informed by CBO’s projections 

of social distancing, of the speed of the past three economic expansions (which were relatively slow in comparison with other expansions since World War II), and of 

the timing of the effects of recent legislative actions.

CBO’s social distancing projections reflect its analysis of 

how the pandemic is expected to unfold over the next 

two years and govern the extent to which certain sectors of the U.S. economy are projected to resume more 

regular operations. In CBO’s estimation, social distancing across the country reached its peak in April 2020. It 

is projected to continue to decline over time, on average 

and with regional and seasonal variation. Specifically, 

relative to its April peak, the degree of social distancing 

is expected to diminish by roughly two-thirds during the 

second half of 2020 and diminish further, but by smaller 

amounts, through the third quarter of 2021. Those projections account for the possibility of additional waves of 

increased transmission of the virus and a retightening of 

the associated social distancing measures. 

To develop those estimates, CBO examined an array 

of outside projections of the pandemic by academic 

institutions, government agencies, and other research 

groups—all of which pointed to a wide range of possible 

outcomes. CBO used an average of potential outcomes, 

accounting for their likelihood, as a basis for its projection of the extent of social distancing.

Gross Domestic Product

After falling by 1.2 percent in the first quarter of 2020, 

real GDP is projected to contract even more sharply—by 

11.2 percent—in the second quarter (see Table 2). At 

annual rates, those declines are equivalent to 4.8 percent and 37.7 percent, respectively. Although the drop 

in output is acute, it has been partially blunted by 

past investments in information technologies (such as 

computers, software, and communications equipment), 

which have made it possible for a significant portion 

of economic activity to continue remotely. Before the 

pandemic began, almost 30 percent of workers reported 

that they could work from home.11 Since the start of the 

pandemic, many more workers have needed to do so, 

often on a full-time basis. Such activity would not have 

been feasible before the development and deployment of 

those information technologies. 

Economic growth is expected to pick up during the 

second half of 2020, averaging 15.8 percent at an annual 

rate during that time. Increases in consumer spending 

are expected to more than offset further declines in business investment during that period. In 2021, real GDP is 

projected to grow by 4.2 percent on a fourth-quarter-tofourth-quarter basis. 

Consumer Spending. CBO projects that consumer 

spending will fall by 11.6 percent in the second quarter 

of 2020 (or decline by 39.0 percent at an annual rate) 

as social distancing measures constrain and dampen 

spending. That projection is guided by the agency’s 

reading of data for late March, by its assessment that 

social distancing curbed consumer activity the most 

during April, and by its expectations about the scale and 

duration of social distancing thereafter. 

The contraction began as households pulled back from 

spending in several categories—especially travel, entertainment, and services that require close personal proximity (such as hair care and dentistry). A large decline in 

the stock market from mid-February to mid-March also 

prompted some households to cut spending. Many more 

households probably decreased their spending as unemployment began to rise during that period, some as a 

direct response to the loss of jobs and income and others 

out of fear of possible job loss. 

11. See Rose A. Woods, “Job Flexibilities and Work Schedules in 

2017–18,” U.S. Bureau of Labor Statistics Spotlight on Statistics

(April 2020), https://go.usa.gov/xvMsq (PDF, 1.34 MB).
May 2020 INTERIM ECONOMIC PROJECTIONS FOR 2020 AND 2021 9

As restrictions on economic and social activities are gradually lifted, the main factor that is suppressing consumer 

spending during the second quarter will begin to abate 

during the latter part of 2020. Largely for that reason, 

CBO expects that consumer spending will rebound and 

grow at an average annual rate of 22.6 percent during 

the second half of 2020. Although less than its peak in 

April, some degree of social distancing is still expected to 

persist through that period and thus partially constrain 

consumer spending. 

Figure 2.

Output and Employment Measured as the Difference From the Fourth Quarter of 2019

 Projected

−14

−12

−10

−8

−6

−4

−2

0

Q4 Q1

2020

Q2 Q3 Q4 Q1

2021

Q2 Q3 Q4

Percent

Real Output

−17.8 −19.3

−12.6 −10.6 −9.3 −8.6 −8.1

 −7.8 −5.3

 −4.4

 −3.8

 −3.4 −2.9 −2.5

 −0.9

−25.6 −24.6

−17.0

−14.4

−12.7 −11.5 −10.6

 Projected

−30

−20

−10

0

Q4 Q1

2020

Q2 Q3 Q4 Q1

2021

Q2 Q3 Q4

Millions of People

Employment

Unemployment Eect

Labor Force Eect

The coronavirus pandemic 

and the social distancing 

measures implemented to 

contain it have adversely 

affected both the overall 

demand and overall supply 

of goods and services in the 

economy, causing output to 

plunge. Although economic 

conditions improve markedly 

by the fourth quarter of 

2021 in CBO’s projections, 

inflation-adjusted output 

remains 1.6 percent lower 

than it was in the fourth 

quarter of 2019. 

As a result of the mass layoffs 

and furloughs prompted 

by businesses’ reducing 

their operations or closing, 

25.6 million fewer people, 

on average, are projected to 

be employed in the second 

quarter of 2020 than were 

employed in the fourth 

quarter of 2019, reflecting 

an increase of 17.8 million 

in unemployment and a 

reduction of 7.8 million in the 

size of the labor force.

Sources: Congressional Budget Office; Bureau of Economic Analysis; Bureau of Labor Statistics.

Real values are nominal values that have been adjusted to remove the effects of changes in prices.

The unemployment effect is the number of unemployed people (jobless people who are available for work and are either seeking work or expecting 

to be recalled from a temporary layoff) in the fourth quarter of 2019 minus the number of unemployed people in a given quarter. The labor force effect 

is the size of the labor force (the number of people in the civilian noninstitutionalized population who are at least 16 years old and either working or 

unemployed) in a given quarter minus the number in the fourth quarter of 2019. 
10 INTERIM ECONOMIC PROJECTIONS FOR 2020 AND 2021 May 2020

Recent legislation is also projected to provide a boost 

to consumer spending during the latter half of 2020. 

Temporary federal payments will assist households 

directly (by increasing their disposable income) and 

indirectly (by supporting businesses and their payrolls). 

The targeting of income support suggests that a relatively large proportion of the temporary federal payments will ultimately be spent, although some of that 

spending will be delayed because of continuing restraint 

from social distancing. In addition, increased access 

to unemployment benefits will support spending by 

people who would otherwise have had to cut back even 

more severely; people in low-wage occupations who lose 

their jobs, for example, are likely to have less savings to 

fall back on than other people who lose their jobs. In 

the fourth quarter of 2020, consumer spending will be 

4.1 percent lower than it was in the fourth quarter of 

2019, CBO estimates. 

The pace of recovery moderates during 2021 in 

CBO’s projections, and consumer spending grows 

by 1.2 percent on a fourth-quarter-to-fourth-quarter 

basis. The effects of measures put in place by the federal 

government to support income wane, and some degree 

of social distancing still partially inhibits certain activities. Workers who experience lengthy spells of unemployment, significantly lower income, and uncertain 

prospects during 2020 will probably remain cautious for 

some time even after they resume work, and spending 

by such households will contribute little to the growth 

of demand in 2021. Consumer spending in the fourth 

quarter of 2021 is projected to be 2.9 percent lower than 

it was in the fourth quarter of 2019. 

Business Investment. CBO expects real business fixed 

investment (BFI)—the purchase of new equipment, 

structures, and intellectual property products such as 

software—to decrease by 15.8 percent during 2020 as 

demand for the goods and services that businesses 

produce lessens. Restrictions on activities to prevent 

the spread of the coronavirus will reduce the supply of 

new investment available to businesses, especially in the 

Table 2.

Projected Growth of Real GDP and Its Components

Percent

2020 Annual Ratea

Actual, 

Q1 Q2 Q3 Q4 2020 2021

Real GDP -1.2 -11.2 5.0 2.5 -5.6 4.2

Components of Real GDP

Consumer spendingb -1.9 -11.6 8.0 2.5 -4.1 1.2

Business fixed investmentc -2.2 -12.2 -2.1 0.3 -15.8 13.4

Residential investmentd 4.9 -16.9 -1.0 -0.1 -13.8 16.7

Purchases by federal, state, and local governmentse 0.2 -2.1 -0.6 1.5 -1.0 1.1

Federal 0.4 2.3 0.4 0.4 3.6 -0.2

State and local * -4.7 -1.2 2.2 -3.8 2.0

Exports -2.2 -21.2 15.0 3.5 -8.3 7.6

Imports -4.1 -16.4 8.1 1.7 -11.9 8.4

Sources: Congressional Budget Office; Bureau of Economic Analysis. 

Real values are nominal values that have been adjusted to remove the effects of changes in prices. 

GDP = gross domestic product; * = between zero and 0.05 percent.

a. Measured from the fourth quarter of one calendar year to the fourth quarter of the next.

b. Consists of personal consumption expenditures. 

c. Consists of purchases of equipment, nonresidential structures, and intellectual property products.

d. Includes the construction of single-family and multifamily structures, manufactured homes, and dormitories; spending on home improvements; and 

brokers’ commissions and other ownership transfer costs. 

e. Based on the national income and product accounts. 
May 2020 INTERIM ECONOMIC PROJECTIONS FOR 2020 AND 2021 11

second quarter, when real BFI is expected to decline 

by 12.2 percent (which is equivalent to a reduction of 

40.7 percent at an annual rate). Furthermore, significantly lower oil prices will hit investment in the oil and 

gas industries disproportionately hard. Although investment in mining equipment and structures (the category 

that includes oil and gas investment) accounted for 

less than 5 percent of all BFI activity in late 2019, it is 

expected to account for about 17 percent of the decline 

in real BFI in 2020. CBO expects that lower outlays for 

equipment and structures will push real BFI down at an 

average annual rate of 3.7 percent in the second half of 

2020. If not for actions taken by the Federal Reserve to 

support asset prices and to establish lending programs for 

businesses, the decline in business investment this year 

would be worse.

Although CBO expects BFI to increase by 13.4 percent 

in 2021, it will remain 4.5 percent lower in the fourth 

quarter of that year than it was two years earlier. GDP 

in the fourth quarter of next year also will remain lower 

than it was in 2019, reducing the need for additional 

equipment, structures, and intellectual property.

The same factors that govern BFI will determine inventory investment. In response to sharply lower demand 

for their products, businesses will reduce their inventories, CBO projects, subtracting nearly 1 percentage 

point from GDP growth in 2020. As businesses move 

from destocking inventories in 2020 to restocking them 

in 2021, inventory investment will add more than 

1 percentage point to GDP growth. Nonetheless, CBO 

expects the stock of inventories to be lower in the fourth 

quarter of 2021 than it was two years earlier.

Residential Investment. Real residential investment—a 

category that mainly comprises new construction, 

remodeling, and the costs of buying and selling 

homes—will decline by 13.8 percent in 2020, in CBO’s 

estimation. As people lose their jobs, the demand for 

new homes will drop. All of that decline will occur in 

the second quarter, when CBO expects real residential 

investment to contract by 16.9 percent (or contract by 

52.2 percent at an annual rate) after growing by 4.9 percent in the first quarter. During the second half of 2020, 

real residential investment will decrease at an annual rate 

of 2.2 percent, because the smaller number of housing 

starts in the second quarter will translate into less work 

for the rest of the year. As the economy bounces back in 

2021, however, real residential investment will rise by 

16.7 percent, aided by low mortgage rates. The amount 

of new construction is expected to be 1 percent stronger 

in the fourth quarter of 2021 than it was in the fourth 

quarter of 2019.

Government Purchases. If current laws governing federal 

taxes and spending generally remain in place, real purchases of goods and services—such as public education 

services, highways, and military equipment—by federal, 

state, and local governments will decline by 2.1 percent 

(or decline by 8.0 percent at an annual rate) in the second quarter of 2020. Thereafter, those purchases are projected to increase at an average annual rate of 1.8 percent 

during the latter half of 2020 and then by 1.1 percent in 

2021 on a fourth-quarter-to-fourth-quarter basis. In the 

fourth quarter of 2021, the amount of real government 

purchases is projected to be about the same as it was two 

years earlier.

All of the projected decline in real government purchases 

in the second quarter of 2020 can be attributed to the 

drop in real purchases by state and local governments, 

which is only partially offset by an increase in real 

federal spending on goods and services stemming from 

pandemic-related legislation. State and local governments are projected to significantly cut their spending 

on real purchases during the second and third quarters 

of 2020 as a result of school closures and a deteriorating 

fiscal outlook. As the economy begins to recover and as 

reduced social distancing allows some schools to reopen, 

real state and local spending will pick up after the third 

quarter of 2020; nonetheless, by the fourth quarter 

of 2021 it will remain 1.8 percent below the amount 

recorded in the fourth quarter of 2019. 

Net Exports. After declining in the first quarter of 2020, 

U.S. export and import flows are projected to drop even 

more substantially in the second quarter as social distancing disrupts supply chains (limiting production capacity) 

and as declines in household and business income in 

the United States and abroad reduce overall demand for 

traded goods and services.12 The reduction in exports is 

expected to exceed the reduction in imports, implying a 

slightly larger U.S. trade deficit (the difference between 

12. Social distancing measures have led a number of U.S. exporters 

to suspend operations (or instead produce medical equipment for 

domestic use). In addition, economic disruptions in major U.S. 

trading partners have led to delays in producing intermediate 

inputs needed by some U.S. exporters. Those delays have limited 

the production capacity of U.S. exporters. 
12 INTERIM ECONOMIC PROJECTIONS FOR 2020 AND 2021 May 2020

the value of U.S. imports and the value of U.S. exports) 

than in the first quarter of the year. In the second half of 

2020 and beyond, exports and imports are expected to 

rebound as the economic effects of the pandemic wane. 

However, exports are projected to rise more quickly than 

imports, leading to a decrease in the U.S. trade deficit 

over those quarters. The rebound in exports is expected 

to be stronger than the rebound in imports primarily 

because of the slow recovery of U.S. domestic demand 

relative to demand in major U.S. trading partners.13

Export Flows. After falling by 21.2 percent in the second 

quarter of 2020 (or decreasing by 61.4 percent at an 

annual rate), U.S. exports of real goods and services are 

projected to grow at an average annual rate of 41.7 percent in the second half of 2020 and by 7.6 percent in 

2021. By the fourth quarter of 2021, CBO projects, 

real exports will be 1.2 percent lower than their value 

in the fourth quarter of 2019. CBO’s projection of 

U.S. exports is closely tied to its projection of economic 

activity abroad. Among major U.S. trading partners, real 

output is expected to have declined by nearly 11 percent 

between the fourth quarter of 2019 and the second quarter of this year.14 That contraction in foreign production 

reduces foreign income and, in turn, lowers demand for 

certain goods and services produced by U.S. exporters. 

Factors contributing to the partial rebound in export 

growth include stronger economic growth among major 

U.S. trading partners, the loosening of supply constraints 

(both in the United States and abroad), and a weaker 

dollar (discussed below). 

Import Flows. CBO expects real imports to decline in the 

second quarter of 2020 before partially recovering over 

the next year and a half. U.S. imports of real goods and 

services are projected to decline by 16.4 percent in the 

second quarter of this year (or drop by 51.2 percent at 

13. In 2021, growth of real output among major U.S. trading 

partners is expected to average 4.7 percent, whereas U.S. real 

GDP is expected to grow by 4.2 percent.

14. The severity of the economic contraction resulting from the 

pandemic is expected to vary across U.S. trading partners. For 

example, real GDP among the countries of the euro zone is 

expected to contract by 14 percent over the first half of 2020. 

In contrast, real output in China and South Korea is expected 

to decline by 5 percent and 4 percent, respectively, over that 

same period. Those differences in economic performance reflect 

differences in the severity of the coronavirus outbreak, speed of 

containment, and duration and intensity of social distancing 

restrictions, as well as underlying growth trends in those countries. 

an annual rate). Categories of imports that are expected 

to see the largest declines include travel services, energy 

products, and motor vehicles and parts. Going forward, 

U.S. imports of real goods and services are projected to 

grow at an average annual rate of 20.9 percent in the 

second half of 2020 and by 8.4 percent in 2021. By the 

fourth quarter of 2021, real imports will be 4.4 percent 

lower than their value in the fourth quarter of 2019, in 

CBO’s estimation. The pickup in imports will be largely 

driven by the partial rebound in domestic demand for 

goods and services, as well as the expected improvement 

in foreign supply chains. 

Value of the Dollar. Changes in the international 

exchange value of the dollar contribute to CBO’s projections of U.S. exports and imports.15 A stronger dollar 

reduces the competitiveness of U.S. exports in foreign 

markets and makes imported goods and services less 

costly for U.S. consumers and businesses. After appreciating by 1.5 percent in the first quarter of this year, the 

dollar is expected to continue to rise by an additional 

3.6 percent in the second quarter as foreign demand for 

dollar funding and safe dollar-denominated assets rises. 

As the effects of the pandemic wane, CBO expects the 

dollar’s value to decline. Between the second quarter of 

2020 and the fourth quarter of 2021, CBO projects, 

the export-weighted value of the dollar will decrease by 

11.4 percent. 

The Labor Market

During the second quarter of 2020, the labor market 

is projected to see the steepest deterioration since the 

1930s. The unemployment rate is expected to average 

15 percent, up from less than 4 percent in the fourth 

quarter of 2019. That surge reflects projected reductions 

of almost 26 million in employment and about 8 million 

in the size of the labor force (see Table 3).

Labor market conditions are projected to gradually stabilize in the coming months and begin to improve more 

materially after the third quarter of this year. Business 

activity will recover as the degree of social distancing 

diminishes, leading to an increase in the demand for 

workers. Although less than at its peak in April, some 

degree of social distancing is still expected to persist 

through the third quarter of 2021, partially constraining 

15. CBO’s measure of the exchange value of the dollar is an exportweighted average of the exchange rates between the dollar and the 

currencies of leading U.S. trading partners.
May 2020 INTERIM ECONOMIC PROJECTIONS FOR 2020 AND 2021 13

business activity and the demand for workers. In addition, the expected pace of labor market recovery is 

dampened by the prospect that many businesses may 

not survive the earlier, extended period of revenue loss. 

In CBO’s projections, the unemployment rate declines 

after the third quarter and reaches 8.6 percent by the 

fourth quarter of 2021, which is about 5 percentage 

points higher than it was in the fourth quarter of 2019. 

Additionally, about 3 million fewer people are projected 

to be in the labor force by the fourth quarter of next 

year.

The sharp downturn in economic activity and the rapid 

deterioration in labor market conditions are expected 

to have severe negative effects—both immediately and 

potentially over the long term—on many workers, 

households, and communities. The job losses have been 

concentrated in service-providing industries with low 

average earnings, so low-income households may lose a 

large fraction of their labor income in the near term. (As 

a whole, those households had experienced accelerated 

economic gains in recent years.) Moreover, both the 

reduction in the number of people employed in 2020 

and the persistence of high unemployment through 

2021 may have a negative effect on the job prospects 

and earnings of younger generations that will be felt 

long into the future. For example, college graduates and 

others who enter the labor market now are expected to 

have substantially lower earnings initially than those who 

entered when economic conditions were stronger. Some 

of those effects will continue for years. 

Table 3.

CBO’s Projections of the Current Labor Market Decline

Changes Over

Key Periods

Changes Over Past Periods 

of Labor Market Declinea

Actual,

2019 Q4

Actual,

2020 Q1 2020 Q2 2020 Q3

2019 Q4–

2020 Q2

2019 Q4–

2020 Q3

1981 Q3–

1982 Q4

2007 Q4–

2009 Q4

Millions 

Payroll Jobsb 151.8 152.1 128.8 130.3 -23.0 -21.4 -2.7 -8.3

Household Employmentc 158.6 157.7 133.0 134.1 -25.6 -24.6 -1.4 -7.9

Unemploymentd 5.8 6.3 23.6 25.1 17.8 19.3 3.8 7.9

Labor Forcee 164.4 164.0 156.6 159.2 -7.8 -5.3 2.4 -0.1

Civilian Noninstitutionalized 

Population Age 16 or Olderf 260.0 259.6 260.2 260.7 0.1 0.7 2.6 3.8

Rate (Percent)

Employment-to-Population Ratiog 61.0 60.8 51.1 51.4 -9.9 -9.6 -1.7 -4.4

Unemployment Rateh 3.5 3.8 15.1 15.8 11.5 12.2 3.3 5.1

Labor Force Participation Ratei 63.2 63.2 60.2 61.1 -3.0 -2.2 0.4 -1.1

Sources: Congressional Budget Office; Bureau of Labor Statistics. 

a. The periods shown here begin at the onset of a recession and end when unemployment peaked. Although there have been four recessions since 

1981, labor market conditions deteriorated significantly during these two periods, making them the most comparable to the current crisis.

b. Estimate of the number of jobs from a monthly survey of businesses conducted by the Bureau of Labor Statistics.

c. Estimate of the number of employed people from a monthly survey of households conducted by the Census Bureau for the Bureau of Labor Statistics.

d. The number of jobless people who are available for work and are either seeking work or expecting to be recalled from a temporary layoff.

e. The number of people age 16 or older in the civilian noninstitutionalized population who have jobs or who are unemployed.

f. Excludes members of the armed forces on active duty or people in penal or mental institutions or in homes for the elderly or infirm.

g. Calculated as household employment divided by the civilian noninstitutionalized population age 16 or older. Changes are shown in percentage points.

h. Calculated as unemployment divided by the labor force. Changes are shown in percentage points.

i. Calculated as the labor force divided by the civilian noninstitutionalized population age 16 or older. Changes are shown in percentage points.
14 INTERIM ECONOMIC PROJECTIONS FOR 2020 AND 2021 May 2020

Particular provisions in recent legislation are expected 

to provide partial and temporary support for businesses 

and workers facing financial challenges. For instance, the 

Paycheck Protection Program provided forgivable loans 

to millions of small businesses and other eligible entities 

to help them keep or rehire workers for eight weeks in 

the second quarter of 2020. And an extra $600 per week 

in unemployment insurance (UI) benefits is expected 

to support tens of millions of workers for four months 

during the second and third quarters of this year.

To estimate the effects of the pandemic, social distancing 

measures, and recent legislation on the labor market, 

CBO separately assessed the impact of recent shocks and 

government responses on different industries and on 

firms of different sizes. The agency’s overall assessment 

and projections for the labor market over the next two 

years are outlined below.

Employment. As the economy emerges from the shocks 

that occurred in March and April, job losses will probably taper in coming months. Businesses that received 

loans from the PPP are expected to recall or rehire 

workers who have been furloughed or laid off, spurring 

an uptick in hiring and slowing job losses. In the second 

quarter of 2020, nonfarm payroll employment (which 

measures the number of nonfarm jobs) is projected to 

average 129 million, which is 15 percent fewer jobs than 

in the fourth quarter of 2019. Compared with figures 

before the pandemic began, employment is projected 

to be down by more than 40 percent in the leisure and 

hospitality sector and by more than 10 percent in the 

retail trade, education, transportation, and construction 

sectors. 

Household employment (which measures the number 

of employed people) is expected to average 133 million 

in the second quarter of 2020, which is almost 26 million fewer than in the fourth quarter of 2019. The 

employment-to-population ratio among people age 16 or 

older is expected to average 51.1 percent in the second 

quarter, a loss of almost 10 percentage points from the 

ratio before the pandemic began. 

Employment is expected to remain low in the third 

quarter of 2020. Even though CBO expects that social 

distancing measures will ease and that consumer demand 

will rebound after the second quarter, several factors are 

expected to weigh on employment in the third quarter. 

First, the payroll support that many small businesses and 

other entities received from the PPP will wane in the 

coming weeks or months, which may precipitate a new 

wave of layoffs and furloughs from businesses continuing to experience weak demand and lower revenues. 

Second, health risks from the coronavirus, combined 

with larger unemployment benefits (which, under current law, extend into the third quarter), are expected to 

dampen workers’ incentives to search for a job. Third, 

a notable drop in state and local government tax revenues is expected to lead to more layoffs in the state and 

local government sector. (State and local governments 

together cut about 1 million jobs in March and April, on 

net.) For those reasons, nonfarm payroll employment is 

projected to be only slightly higher in the third quarter 

of 2020 than it is in the second quarter under current 

law, averaging 130 million; household employment is 

projected to average 134 million. 

In CBO’s current projections, the labor market improves 

more materially after the third quarter. Business activity 

and the demand for workers will increase as the degree of 

social distancing diminishes further. As a result, payroll 

employment is projected to recover about 30 percent of 

its loss by the fourth quarter of 2020. That quick, albeit 

partial, rebound is possible because a large fraction of the 

layoffs so far appear to be temporary, which would allow 

businesses to recall furloughed employees and resume 

operations relatively quickly. 

Despite the initial rebound in employment, health 

risks are expected to linger and some degree of social 

distancing is projected to remain in place into next 

year. In addition, the expected pace of labor market 

recovery will be dampened by the prospect that many 

businesses may not recover from the revenue loss they 

experienced in 2020. In CBO’s current projections, 

growth in nonfarm payroll employment averages about 

600,000 per month in 2021. By the fourth quarter of 

that year, household employment is projected to recover 

to 148 million, which would still be 7 percent lower 

than it was in the fourth quarter of 2019. Although 

the employment-to-population ratio rises to 56.2 percent, it will still be about 5 percentage points below its 

prepandemic rate.

Unemployment. In April, the unemployment rate surged 

to 14.7 percent, the highest rate in the history of the 

monthly data series (which goes back to January 1948). 

In CBO’s projections, the unemployment rate averages 

15 percent in the second quarter of this year and rises to 
May 2020 INTERIM ECONOMIC PROJECTIONS FOR 2020 AND 2021 15

16 percent in the third quarter as the PPP expires under 

current law, labor demand remains low, and labor force 

participation rebounds (see Figure 3). The unemployment rate is projected to decline after the third quarter, 

reaching 8.6 percent in the fourth quarter of 2021. That 

rate, although roughly half of its projected peak, would 

still be more than twice what it was in the fourth quarter 

of 2019, before the pandemic began.

CBO’s projections of the unemployment rate reflect 

the agency’s assessment of the scale of job losses in the 

economy, as well as its estimate of the changes in the size 

of the labor force. The latter factor is particularly noteworthy in the current crisis because the definition of the 

unemployment rate is relatively narrow. To be counted 

as unemployed, a jobless person needs to have searched 

for a new job within the past four weeks or expect to be 

recalled to a former job within six months. In the current 

crisis, many factors—including the health risks from the 

pandemic, the severity of labor market conditions, and 

other disruptions such as school closures—are expected 

to prevent or discourage some people from searching 

for jobs, causing the labor force to shrink and thereby 

restraining the initial rise in the unemployment rate. 

CBO projects that the labor force participation rate will 

rebound more strongly than employment in the third 

quarter (as discussed below), causing the unemployment 

rate to continue to rise in that quarter. 

CBO’s projections of the unemployment rate for the 

near term also reflect the agency’s assessment of the 

effects of recent legislation—in particular, the PPP and 

the UI expansion—on the labor market. The PPP is 

projected to boost payroll employment and reduce the 

unemployment rate in the second quarter of 2020, even 

though CBO expects that some of the workers retained 

or rehired under the program will remain largely idle 

because of the heightened social distancing measures and 

the severely reduced demand for labor. The UI expansion provides money to laid-off or furloughed workers 

without moving them back into employment. For many 

workers, an increase in unemployment benefits through 

the end of July boosts their weekly income above what 

they had been earning when working, dampening their 

Figure 3.

The Unemployment Rate

Percent

 Projected

0

4

8

12

16

1980 1985 1990 1995 2000 2005 2010 2015 2020

In April, the unemployment 

rate surged to 14.7 percent. 

In CBO’s projections, that rate 

rises further in the coming 

months and is 15.8 percent 

in the third quarter because 

of the expiration of certain 

provisions in current law, 

subdued labor demand, and 

a rebound in labor force 

participation. After the third 

quarter, the unemployment 

rate declines, but it remains 

elevated through 2021.

Sources: Congressional Budget Office; Bureau of Labor Statistics.

The unemployment rate is the number of jobless people who are available for work and are either seeking work or expecting to be recalled from a 

temporary layoff, expressed as a percentage of the labor force. The size of the labor force is the number of people in the civilian noninstitutionalized 

population who are at least 16 years old and either working or unemployed.

The shaded vertical bars indicate periods of recession, which extend from the peak of a business cycle to its trough. In CBO’s assessment, the business 

cycle reached a peak in the first quarter of 2020 and will probably reach a trough in the second or third quarter of 2020.
16 INTERIM ECONOMIC PROJECTIONS FOR 2020 AND 2021 May 2020

incentive to search for a job. The PPP and UI expansion 

are expected to have opposite effects on certain measures 

of the labor market, such as the unemployment rate. The 

extent of social distancing in the second quarter, however, is expected to lessen both of those effects during 

that period.

Labor Force Participation. The labor force participation 

rate dropped by 3.2 percentage points since February 

and stood at 60.2 percent in April. That sharp fall—

unprecedented since the official monthly data began in 

1948—highlights the fact that, in addition to its effects 

on the demand for labor, the pandemic has also affected 

the supply of labor. The effects vary widely across different demographic groups depending on their age, existing 

health conditions, and occupations. 

Some of the decline in the labor supply is expected to be 

temporary, as people who want a job but for various reasons are not searching for one during the pandemic are 

expected to rejoin the labor force when the health risks 

and social distancing restrictions diminish. But some of 

the decline in the labor supply is expected to persist, as 

some people who exited the labor force in recent months 

were older workers who presumably retired early. Given 

that COVID-19 poses a much higher risk to older people than to younger people, the labor force participation 

rate of the former group is expected to remain depressed 

as long as the pandemic continues.

In CBO’s current projections, the labor force participation rate averages 60.2 percent in the second quarter of 

2020 and rebounds slightly to 61.1 percent in the third 

quarter as social distancing measures ease. It is projected 

to rebound further to 61.5 percent in 2021. 

Labor Compensation. Different businesses and industries are expected to face different wage pressures. Some 

businesses experiencing an increase in demand for their 

products—such as manufacturers of certain medical 

equipment, foods, and cleaning products, as well as websites that offer online shopping and delivery services—

will face pressure to increase their wages to compensate 

their employees for the health risks involved in performing their jobs. (That upward wage pressure is amplified 

by the UI expansion, which dampens incentives for some 

laid-off people to accept new jobs.) Wages in other businesses are projected to experience predominantly downward pressure as those businesses face lower demand for 

their products and less need for workers. 

On net, the persistently high unemployment rate 

projected through 2021 will put downward pressure on 

wage growth. In CBO’s projections, the employment 

cost index for wages and salaries of workers in private 

industry is 1.3 percent higher in the fourth quarter 

of 2020 than it was in the fourth quarter of 2019; its 

annual growth rate in recent years (and before the pandemic began) had been about 3 percent. Wage growth is 

expected to remain weak in 2021, averaging 1.4 percent 

over the year, as slack in the labor market persists. The 

sluggish growth of labor compensation and household 

income will restrain consumer spending in the near term. 

Inflation 

The pandemic has affected consumers and businesses in 

various ways, many of which will affect consumer prices. 

Some businesses have experienced an interruption in 

receiving the inputs they need from domestic and foreign 

sources, and other businesses have shut down because 

of social distancing measures. Both effects have reduced 

the supply of certain goods and services, putting upward 

pressure on consumer prices. 

At the same time, the pandemic has caused the demand 

for certain goods and services to plummet—either 

because consumers have been ordered to refrain from 

consuming them or because they have lost confidence 

in the safety of consuming them—putting downward 

pressure on consumer prices. For example, in April the 

consumer price index for hotel and motel lodgings fell 

by more than 8 percent and the consumer price index 

for airline fares fell by more than 15 percent; those 

were the largest monthly declines in the history of their 

respective indexes. In addition, oil prices have plunged, 

owing to a significant decline in global demand, and they 

are expected to exert substantial downward pressure on 

consumer energy prices over the next few months. 

On net, in CBO’s projections, the effects of the 

pandemic on the supply of goods and services are outweighed by the effects on the demand for them, implying a significant drop in inflation over the next two years. 

The price index for personal consumption expenditures 

(PCE)—the measure that the Federal Reserve uses to 

define its 2 percent long-run objective for inflation—is 

expected to decrease by 1.2 percent (at an annual rate) 

in the second quarter of this year. The PCE price index 

is projected to grow by 0.6 percent in 2020 on a fourthquarter-to-fourth-quarter basis (see Figure 4). 
May 2020 INTERIM ECONOMIC PROJECTIONS FOR 2020 AND 2021 17

Inflation is projected to rise but nonetheless remain 

below the Federal Reserve’s long-run objective through 

2021. As demand for goods and services recovers and oil 

prices rebound from historic lows, the PCE price index 

is expected to grow by 1.5 percent in 2021 on a fourthquarter-to-fourth-quarter basis. 

Interest Rates

Interest rates on Treasury securities are expected to 

remain low through 2021, largely as a result of continued weakness in economic activity and in the labor 

market, actions taken by the Federal Reserve in response 

to that weakness, and investors’ higher demand for lowrisk assets. Those factors are expected to more than offset 

the upward pressure on interest rates from greater federal 

borrowing. CBO expects that the Federal Reserve will 

keep the federal funds rate near zero through 2021. The 

interest rate on 3-month Treasury bills, which closely 

follows the federal funds rate, is expected to remain near 

zero as well (see Figure 5). 

In CBO’s projections, long-term interest rates rise modestly through 2021. Those rates fell to historic lows in 

the first few weeks of the pandemic as a result of higher 

demand for long-term Treasury securities from investors 

and greater purchases of those securities by the Federal 

Reserve. As the U.S. and global economies recover, 

investors’ demand for risk-free Treasury securities is 

expected to diminish. 

CBO expects that the Federal Reserve will continue 

purchasing long-term securities through 2021, but at a 

slower pace, which will put upward pressure on longterm interest rates through 2021. Additionally, long-term 

interest rates, which are partly determined by the average 

of expected future short-term interest rates, are projected 

to increase over the next two years in anticipation of rising short-term interest rates later in the coming decade. 

In CBO’s projections, the interest rate on 10-year 

Treasury notes rises from its current value of 0.7 percent, 

averaging 1.0 percent in 2021. 

Figure 4.

Inflation

Percent

 Projected

0

0.5

1.0

1.5

2.0

2.5

2016 2017 2018 2019 2020 2021

Federal Reserve’s Objective

Change in the PCE 

Price Index

In CBO’s projections, inflation 

drops sharply in the second 

quarter of this year, in part 

because the price of oil has 

collapsed. Inflation remains 

below the Federal Reserve’s 

long-run objective through 

the end of 2021 because the 

demand for certain goods and 

services continues to be low.

Sources: Congressional Budget Office; Bureau of Economic Analysis; Federal Reserve.

Inflation is measured as the change from a given quarter in one calendar year to the same quarter in the next

PCE = personal consumption expenditures.
18 INTERIM ECONOMIC PROJECTIONS FOR 2020 AND 2021 May 2020

Some Uncertainties in 

CBO’s Economic Projections

An unusually high degree of uncertainty surrounds these 

economic projections. That heightened uncertainty stems 

from four major factors: 

• How the pandemic will unfold this year and next year,

• How the pandemic and social distancing will affect 

the economy,

• How recent policy actions will affect the economy, and

• How economic data will ultimately be recorded.

Additionally, if future federal policies differ from those 

underlying CBO’s economic projections—for example, 

if lawmakers enact additional pandemic-related legislation—then economic outcomes will probably differ from 

those projected here.

The Course of the Pandemic 

The severity and duration of the pandemic are highly 

uncertain. Many factors that will influence the future 

progress of the pandemic are unclear. Because this 

coronavirus is new, important epidemiological characteristics are still being studied. Among those are how easily 

transmissible the virus is, the extent to which the virus is 

transmissible before people who are infected show symptoms, the extent to which people can be infected without 

showing any symptoms, the extent of any immunity 

built up by people who have recovered from the infection, whether the virus becomes less transmissible during 

certain seasons, and the lethality of the illness caused by 

the virus. 

Another source of uncertainty is how individuals and 

policymakers will respond to the pandemic in the 

coming months. The policies being implemented in 

the United States and around the world to mitigate the 

spread of the virus vary and are still evolving. Some areas 

have begun to lift certain social distancing measures, 

but they could have additional waves of outbreaks that 

require the reimposition of social distancing or other 

mitigation measures, such as widespread testing and 

contact tracing. Those future waves could be smaller, of 

a similar size, or larger than the initial wave experienced 

this spring. Most importantly, the time frame for the 

development and distribution of treatments for COVID19 or an effective vaccine for the disease is not known. 

The Pandemic and the Economy

Output, employment, inflation, interest rates, and 

many other macroeconomic variables will be greatly 

influenced by the course of the pandemic and the social 

Figure 5.

Interest Rates

Percent

 Projected

0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2016 2017 2018 2019 2020 2021

3-Month 

Treasury Bills

10-Year 

Treasury Notes

Interest rates on Treasury 

securities are projected 

to remain low through 

2021 because of subdued 

economic activity, weak labor 

market conditions, actions 

taken by the Federal Reserve, 

and an increase in investors’ 

demand for low-risk assets.

Sources: Congressional Budget Office; Federal Reserve.
May 2020 INTERIM ECONOMIC PROJECTIONS FOR 2020 AND 2021 19

distancing measures implemented to contain it. The 

range of uncertainty about social distancing, as well as 

its effects on economic activity and implications for the 

economic recovery over the next two years, is especially 

large. For example, if the disease spreads less widely than 

CBO expects—because of testing and contact tracing, a 

vaccine, or for some other reason—the degree of social 

distancing could be lower and the economic recovery 

faster than what CBO currently projects. The opposite could also be the case. In addition, the extension, 

reversal, or reimplementation of different types of social 

distancing policies (such as stay-at-home orders, bans 

on large public gatherings, closures of specific kinds of 

businesses, and closures of schools) might have different 

effects on the economy. 

CBO’s projections of inflation are also highly uncertain 

given the unique combination of supply and demand 

factors affecting the economy. In CBO’s estimation, the 

downward pressure on prices stemming from decreased 

demand for certain goods and services will more than 

offset the upward pressure from the decreased supply 

of goods and services over the next two years. However, 

the decrease in businesses’ ability to supply goods and 

services could be much larger than the agency expects, 

which would result in a smaller decline (or possibly even 

an increase) in inflation. Conversely, weak economic 

activity could suppress demand for many goods and services even more than CBO expects, resulting in a more 

substantial decline in inflation. 

Effects of Recent Fiscal and Monetary Policy Actions

Recent policy interventions by the federal government 

compound the uncertainty in CBO’s economic projections. Individuals, businesses, and state and local governments could respond more (or less) to the large amount 

of federal support being provided to the economy, 

resulting in faster (or slower) economic growth than 

CBO anticipates. The extensive support that the federal 

government and the Federal Reserve have provided could 

permit a rapid rebound in economic activity and labor 

market conditions as the pandemic subsides. Another 

factor contributing to the uncertainty is how households 

and businesses will respond to changes that they expect 

to occur in federal tax and spending policies, which is 

difficult to estimate.

CBO’s analysis of the economic effects of recent legislation is informed by evidence about how past legislative 

actions that are most comparable to the recent legislation 

have affected economic activity. For example, CBO’s 

estimates of the economic effects of payments to individuals provided under the CARES Act are informed by evidence about the effects of payments to tax filers provided 

by the Economic Stimulus Act of 2008 (P.L. 110-185). 

That evidence may be less informative than usual in 

this situation, however, given the novel circumstances 

surrounding the pandemic and the subsequent economic 

developments. Moreover, CBO is uncertain about how 

much social distancing will dampen the economic effects 

of recent legislation and how rapidly disrupted economic 

activity will recover as restrictions start to ease. 

An additional area of uncertainty is how specific legislative actions will affect the economy—in particular, provisions that provide loans to businesses and reduce certain 

business taxes, expand eligibility for unemployment 

compensation and increase weekly benefits, and provide 

credit assistance to certain businesses and funding for 

state and local governments. For example, the effects of 

business loans on economic activity depend on the number of distressed businesses and their financial viability. 

The effects of policy actions on CBO’s projections of 

inflation and interest rates are also uncertain, particularly 

in light of the rapid increase in federal borrowing in 

response to the pandemic. Monetary and fiscal policymakers have provided an unprecedented amount of 

support to the economy to curtail the adverse effects of 

the pandemic. That support might exert more or less 

pressure on inflation than CBO currently projects. In 

addition, the extent and timing of upward pressure on 

interest rates caused by greater federal borrowing, and 

the downward pressure from the increased demand for 

risk-free assets and additional purchases of long-term 

Treasury securities by the Federal Reserve, are unclear.

The Reporting of Data

Another source of uncertainty is how government statisticians will ultimately record economic data when their 

standard estimation methods and data sources cannot 

accommodate extreme changes. To capture the effects 

of the quickly deteriorating economic situation, BEA 

used several new approaches. To estimate GDP during 

the first quarter of 2020, for example, BEA used private 

high-frequency data on credit card transactions to measure rapid changes in consumer spending. One drawback 

of using new methodologies is that the resulting data are 

not as comparable with earlier data, making it difficult 

to extrapolate from historical patterns to project future 

outcomes. 
20 INTERIM ECONOMIC PROJECTIONS FOR 2020 AND 2021 May 2020

Another concern is that sampling bias may arise if it 

is difficult to collect data because of social distancing 

protocols. For example, the Bureau of Labor Statistics 

(BLS) noted that the response rate among households 

to the Current Population Survey dropped substantially 

after the pandemic began. Because the households and 

establishments that report data may systematically differ 

from the ones that do not, those data might be skewed 

and deviate from their true underlying trends. Moreover, 

some respondents may misunderstand survey questions, 

resulting in the misclassification of some observations. 

The BLS reported that such misclassification probably 

led to the unemployment rate being understated by 

almost 5 percentage points in the April data. 

Finally, other sources of measurement errors tend to be 

most acute during the onset of recessions. To adjust for 

measurement issues (such as sampling biases), statistical agencies routinely use models that rely on historical 

relationships. When the economy experiences sudden 

and large changes, those models tend to perform poorly, 

leading to large measurement errors and obscuring the 

underlying trends.

Comparison With Other 

Economic Projections

CBO’s projections of the economy for 2020 and 

2021 are broadly similar to the average of about 

Table 4.

Comparison of CBO’s Economic Projections With the Blue Chip Survey

Percent

2020 Annual Ratea

Q2 Q3 Q4 2020 2021

Growth of Real GDP (Annual rate)b 

CBO -37.7 21.5 10.4 -6.0 4.4

Blue Chip consensus -32.1 11.6 8.8 -5.8 4.0

Growth of Nominal GDP (Annual rate)

CBO -38.7 22.2 10.9 -5.3 5.3

Blue Chip consensus -32.4 12.8 10.3 -4.6 5.4

Inflation

Change in the consumer price index 

for all urban consumers (Annual rate)

CBO -2.2 1.6 1.7 1.0 1.4

Blue Chip consensus -3.2 1.6 1.9 0.8 1.7

Change in the GDP price index (Annual rate)

CBO -1.5 0.6 0.4 0.8 0.9

Blue Chip consensus -0.4 1.1 1.4 1.1 1.4

Unemployment Rate

CBO 15.1 15.8 11.5 11.5 9.3

Blue Chip consensus 15.3 12.6 10.3 10.6 8.0

Interest Rates

3-month Treasury bills

CBO 0.1 0.1 0.1 0.4 0.1

Blue Chip consensus 0.1 0.1 0.1 0.3 0.2

10-year Treasury notes

CBO 0.7 0.8 0.9 0.9 1.0

Blue Chip consensus 0.7 0.8 0.9 0.9 1.2

Sources: Congressional Budget Office; Wolters Kluwer, Blue Chip Economic Indicators, vol. 45, no. 5 (May 10, 2020).

GDP = gross domestic product. 

a. For growth of real GDP, growth of nominal GDP, and inflation, annual rates are measured as the change in the annual average from one calendar 

year to the next. For the unemployment rate and interest rates, annual rates are annual averages. 

b. Real values are nominal values that have been adjusted to remove the effects of changes in prices.
May 2020 INTERIM ECONOMIC PROJECTIONS FOR 2020 AND 2021 21

50 private-sector economists whose forecasts were published in the May 2020 Blue Chip Economic Indicators. In 

particular:

• CBO’s annual projections of real GDP growth, the 

unemployment rate, and interest rates are within the 

middle two-thirds of the range of Blue Chip forecasts 

for 2020 and 2021. 

• CBO’s annual projections of GDP price inflation 

and consumer price inflation (as measured by the 

consumer price index for all urban consumers) for 

2020 and 2021 are near or within the middle twothirds of the range of Blue Chip forecasts. 

CBO’s quarterly economic projections of real GDP 

growth, the unemployment rate, and interest rates for 

2020 are similar to their averages in the Blue Chip—

except for real GDP growth and the unemployment 

rate in the third quarter (see Table 4 on page 20). For 

inflation, the projections differ even more. At least part 

of the variation between CBO’s projections and those 

of other forecasters (including those in the Blue Chip) is 

attributable to differences in the economic data available 

when the forecasts were completed and to differences 

in the economic and statistical models used to prepare 

them. Moreover, the variation may reflect differences 

in the underlying epidemiological and social distancing 

projections used by CBO and other forecasters. 

In addition, other forecasters may predict that additional 

pandemic-related legislation will be enacted, whereas 

CBO’s projections incorporate the assumption that 

current laws generally remain unchanged and that no 

significant additional emergency funding is provided. 

For example, compared with the averages in the Blue 

Chip forecasts, CBO projects faster economic growth but 

also a higher unemployment rate in the third quarter of 

2020. That projection in part reflects the scheduled expiration of the Paycheck Protection Program, which CBO 

expects may cause many of the workers in businesses 

supported by that program to become unemployed 

during that quarter; private-sector forecasters may have 

made different assumptions about the features and economic effects of that program over time.
List of Tables and Figures

Tables

1. CBO’s Economic Projections for 2020 and 2021 7

2. Projected Growth of Real GDP and Its Components 10

3. CBO’s Projections of the Current Labor Market Decline 13

4. Comparison of CBO’s Economic Projections With the Blue Chip Survey 20

Figures

1. Job Losses by Industry During March and April 2020 4

2. Output and Employment Measured as the Difference From the Fourth Quarter of 2019 9

3. The Unemployment Rate 15

4. Inflation 17

5. Interest Rates 18
About This Document

This volume is one of a series of reports on the state of the economy that the Congressional 

Budget Office issues each year. In keeping with CBO’s mandate to provide objective, impartial 

analysis, this report makes no recommendations.

CBO consulted with members of its Panel of Economic Advisers during the development of 

this report. Members are Katharine Abraham, Alan Auerbach, David Autor, Olivier Blanchard, 

Markus Brunnermeier, Seth Carpenter, Steven Davis, Kathryn Dominguez, Karen Dynan, 

Robert Hall, Jan Hatzius, Donald Kohn, Nellie Liang, Gregory Mankiw, Emi Nakamura, 

Jonathan Parker, James Poterba, Valerie Ramey, Aysegul Sahin, James Stock, Kevin Warsh, and 

Mark Zandi. CBO also consulted with David Wilcox on several aspects of the projections. 

Although CBO’s outside advisers provided considerable assistance, they are not responsible for 

the contents of this report. 

John Seliski wrote the report, and Jeffrey Schafer prepared the exhibits. Christina Hawley 

Anthony, William Carrington, Molly Dahl, Meredith Decker, Theresa Gullo, John McClelland, 

Brooks Pierce, and Chad Shirley provided helpful comments. The economic forecast and 

related estimates were prepared by Aaron Betz, Yiqun Gloria Chen, Erin Deal, Daniel Fried, 

Edward Gamber, Ronald Gecan, Mark Lasky, Junghoon Lee, Michael McGrane, Jaeger Nelson, 

Sarah Robinson, Jeffrey Schafer, John Seliski, Robert Shackleton, and Christopher Williams. 

Many other analysts at CBO contributed information about the pandemic and the effects of 

actions taken in response to it. Erin Deal and Sarah Robinson fact-checked the report. The 

writing of the report and the preparation of the forecast were supervised by Jeffrey Werling, 

John Kitchen, Devrim Demirel, and Robert Arnold.

Mark Doms, Wendy Edelberg, Jeffrey Kling, and Robert Sunshine reviewed the report. 

Christine Bogusz and Bo Peery were the editors, and Casey Labrack and Robert Rebach 

were the graphics editors. An electronic version is available on CBO’s website (www.cbo.gov/

publication/56351).

CBO continually seeks feedback to make its work as useful as possible. Please send any comments 

to communications@cbo.gov.

Phillip L. Swagel

Director

May 2020