U.S. labor market will need 10 years to recover
In a 10-year economic outlook report, the CBO projected unemployment rate to fall to 10.5 percent in the fourth quarter this year, and then to 7.6 percent in the fourth quarter of 2021.
Despite continuous decline, U.S. unemployment rate could still be 4.4 percent in the fourth quarter of 2030, indicating the coronavirus pandemic's scaring effect on U.S. labor market over the next decade.
U.S. employers added 4.8 million jobs in June, pushing the nation's unemployment rate down to 11.1 percent, the U.S. Bureau of Labor Statistics (BLS) reported Thursday.
According to CBO's projection, gross domestic product (GDP) will shrink 5.9 percent in 2020 on a fourth-quarter to fourth-quarter basis. In 2021, U.S. economy will grow by 4.8 percent.
Several U.S. states, mostly in the South and West, have recently seen an uptick in COVID-19 cases, prompting some of them to roll back or pause reopening plans. Texas, for example, announced last week that it would close bars and reduce restaurant occupancy.
Economists have warned that the resurgence of COVID-19 cases across the United States is threatening to derail the nascent economic recovery.
"The third-quarter bounce in real GDP growth, which we have been expecting to be almost 20 percent annualized (after an over 30 percent annualized decline in the second quarter), is in jeopardy," Mark Zandi, chief economist of Moody's Analytics, wrote in an analysis earlier this week.
Diane Swonk, chief economist at Grant Thornton, a major accounting firm, wrote in a blog Thursday that this summer will be a struggle for recovery in employment, calling on the U.S. Congress to provide extensions to unemployment insurance and roll out additional aid.
"We need to prepare for what we know is in the pipeline, which is not pretty," Swonk said. ■