US economy will recover in mid-2021 without Biden bailout: CBO

WASHINGTON – The US economy will rebound to its pre-pandemic size by mid-year without any emergency stimulus, the US Congressional Budget Office projected on Monday.

The report throws a soft wrench into President Biden’s willingness to push through a massive $ 1.9 trillion bailout ahead of a meeting with 10 Republican lawmakers at the White House on Monday night after presenting their own more modest proposal.

The non-partisan federal agency is making an optimistic forecast following a year-long fight against the coronavirus that has killed 441,000 Americans, put millions of people out of work and shut down large swathes of the US economy.

The office said gross domestic product would return to pre-pandemic levels by mid-2021 and continue to grow until 2026, as a vaccine would reduce the number of new infections and the need for social distancing.

“Labor market conditions continue to improve. As the economy grows, many people are joining the civilian workforce that left it during the pandemic, restoring it to its pre-pandemic size in 2022, ”the report said.

“The unemployment rate is gradually decreasing throughout the period, and the number of people employed returns to its pre-pandemic level in 2024,” he continued.

The Biden administration last month unveiled a $ 1.9 trillion bailout as the first major legislative effort as the unemployment rate hovers around 6.7%.

The package includes 1,400 stimulus checks for eligible Americans, $ 20 billion for a national immunization program and would halve child poverty.

But many Tories and West Virginia’s Democratic Senator Joe Manchin, a key vote, opposed passing such a big package on the heels of a $ 900 billion aid bill passed. by Congress, arguing that this will add to the burgeoning national debt.

In a press briefing Monday, White House spokeswoman Jen Psaki dismissed criticism of Biden’s package and said it had been backed by other economic authorities.

“A new report from the Brookings Institution estimates that with the US bailout, we would increase GDP by 4% and bring our economy back to pre-COVID levels by the end of 2021,” Psaki said.

“A separate analysis from Moody’s Analytics found that the president’s plan would create 7.5 million jobs,” she said.