Economy set to bounce back strongly in 2021, says Congressional Budget Office

Economy set to bounce back strongly in 2021, says Congressional Budget Office

The U.S. economy is set in 2021 to accelerate its recovery from the coronavirus-induced contraction of 2020, even without further economic stimulus from Washington, the nonpartisan Congressional Budget Office said.

“CBO currently projects a stronger economy than it did in July 2020, in large part because the downturn was not as severe as expected and because the first stage of the recovery took place sooner and was stronger than expected,” the CBO said in an abbreviated version of its annual outlook released Monday.

The CBO projected economic growth of 4.6% in 2021, compared with a 3.5% contraction in 2020. Unemployment is projected to average 5.7% for the year, while inflation is expected to remain tame, running at 1.9% for the year versus 1.3% in 2020.

The figures could be viewed as undermining Democrats’ case for another big relief and stimulus package. President Joe Biden has proposed another $1.9 trillion in aid, including another set of payments for households and aid to state and local governments.

Congressional Republicans in general have said lawmakers should wait to see how the economy responds to money already approved by Congress that has yet to be spent before agreeing to spend more. A group of 10 Republicans, though, sent has Biden a counterproposal totaling $618 billion, and he has invited them to the White House for discussion.

The CBO said past pandemic relief packages helped the economy, noting that the December package with about $900 billion in aid “played a part in improving the economic outlook.”

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