WASHINGTON: US unemployment rate is expected to gradually decline and the number of people employed will return to its pre-pandemic level in 2024, according to the Congressional Budget Office (CBO).
The Covid-19 pandemic caused “severe economic disruptions” last year to sectors such as travel and hospitality, and job losses were concentrated among lower-wage workers, the CBO said in its report titled An Overview of the Economic Outlook: 2021 to 2031.
Over the course of the coming year, vaccination is expected to greatly reduce the number of new Covid-19 cases, the CBO said, adding that as a result, the extent of social distancing is expected to decline.
In its new economic forecast, the CBO projects that the economic expansion that began in mid-2020 will continue, and real gross domestic product (GDP) is projected to return to its pre-pandemic level in mid-2021.
According to the CBO, US real GDP is on track to grow by 4.6% in 2021, following a 3.5% contraction in 2020.
Noting that labour market conditions continue to improve, the CBO said in the report that as the economy expands, the unemployment rate will gradually decline, and the number of people employed will return to its pre-pandemic level in 2024.
Despite the improvement, the annual average unemployment rate in 2024 and 2025 is expected to reach 4.2%, and the average unemployment rate between 2026 and 2031 will remain elevated at 4.1%, much higher than the historic low of 3.5% the country experienced before the Covid-19 pandemic.
CBO’s projections reflect an average of possible outcomes under current law, but these projections are subject to “an unusually high degree of uncertainty, ” the report noted.
“That uncertainty stems from sources including the course of the pandemic, the effectiveness of monetary and fiscal policies, and the response of global financial markets to substantial increases in public deficits and debt, ” it said. — Xinhua