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1 Comparison of CBO's May 2020 Interim Projections of Gross Domestic Product and Its January 2020 Baseline Projections 1 (June 1, 2020)

handle is hein.congrec/cnocs0001 and id is 1 raw text is: 1 CONGRESSIONAL BUDGET OFFICE Phillip L. Swagel, Director U.S. Congress Washington, DC 20515 June 1, 2020 Honorable Charles E. Schumer Democratic Leader United States Senate Washington, DC 20510 Re: Comparison of CBO's May 2020 Interim Projections of Gross Domestic Product and Its January 2020 Baseline Projections Dear Mr. Leader: In response to your letter of May 27, I am writing to describe how the Congressional Budget Office's May 2020 interim projections of gross domestic product (GDP) compare with the baseline projections the agency published in January this year.1 Nominal GDP In the May 2020 report, CBO projected that the level of nominal GDP in the second quarter of 2020 would be $790 billion (or 14.2 percent) lower than the agency had previously forecast in January 2020.2 The two largest differences between the two forecasts result from the economic effects of the COVID-19 pandemic in reducing output and the legislation enacted between January and early May in response, which partly offsets that reduction. Subsequently, the difference between those projections of nominal GDP narrows from $533 billion (9.4 percent lower in the May 1 See Congressional Budget Office, Interim Economic Projectionsfor 2020 and 2021 (May 2020), www.cbo~gov/publicatio~i563 51, and The Budget and Economic Outlook: 2020 to 2030 (January 2020), www.cbo.gov/publica ior/56020. 2 That reduction is expressed at a quarterly rate (not at an annual rate, as commonly presented by the Bureau of Economic Analysis) to capture the actual dollar amount lost. An annual rate would represent the drop in production in the second quarter as if it persists for a full year and therefore is less appropriate in understanding exactly how GDP changed in the second quarter alone. www.cbo.gov

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