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1 Decline in CBO's Projections of Gross Domestic Product for 2020 and 2021 1 (June 9, 2020)

handle is hein.congrec/deicps0001 and id is 1 raw text is: CONGRESSIONAL BUDGET OFFICE Phillip L. Swagel, Director U.S. Congress Washington, DC 20515 June 9, 2020 Honorable Nancy Pelosi Speaker of the House U.S. House of Representatives Washington, DC 20515 Re: The Decline in CBO's Projections of Gross Domestic Product for 2020 and 2021 Dear Madam Speaker: This letter responds to questions from your staff about the worsening of the economic outlook since the start of the 2020 coronavirus pandemic. The letter compares two projections of gross domestic product (GDP): the interim projections for 2020 and 2021 that the Congressional Budget Office published in May 2020, and the projections that the agency published in January 2020.' How Much Has CBO's Projection of GDP Fallen? Nominal GDP is $3.9 trillion lower over the 2020-2021 period in CBO's May projections than in its January projections (see Table 1). In the May projections, nominal GDP grows an average of zero percent from the fourth quarter of 2019 to the fourth quarter of 2021-the result of a decline in real (inflation-adjusted) GDP offset by some increase in overall prices. In the January projections, by contrast, nominal GDP growth averaged 4.1 percent over that period. What Were the Largest Components of the Decline? A $2.7 trillion downgrade to CBO's projection of consumer spending made the largest contribution to the $3.9 trillion change in projected GDP over the 2020-2021 period. It accounted for about two-thirds of the decline. 1 See Congressional Budget Office, Interim Economic Projections for 2020 and 2021 (May 2020), www.cbo.gov/publicaitioi/56351, and The Budget and Economic Outlook: 2020 to 2030 (January 2020), wwwcbo govipublicatioii/56020. Unless this letter indicates otherwise, all years referred to are calendar years, not federal fiscal years. www.cbo.gov

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