As the recession caused by the coronavirus deepens and government spending on healthcare and economic aid skyrockets, the Congressional Budget Office said on Friday that it expects the federal budget deficit to hit $3.7 trillion by the end of fiscal year 2020—nearly five times the current deficit at the halfway mark of the fiscal year.
KEY FACTS
The current deficit for this fiscal year stands at $744 billion, according to the Bipartisan Policy Center.
The CBO is also predicting that the national debt will eclipse the annual economic output of the United States in 2020, with the ratio of federal debt to GDP rising to 101%.
That would be the deficit’s largest size as a portion of the economy since World War II, the New York Times notes.
The CBO also projected that the economy will shrink by 5.6% over the course of the year, and that the unemployment rate will rise to 16% in the third quarter and remain at a high 11.7% by the end of 2020, averaging 11.4% for the year.
Over the last several weeks, the federal government has passed four massive stimulus packages worth nearly $3 trillion; there is widespread consensus that more legislation will be needed to stabilize the economy.
Many Republicans are now sounding the alarmabout taking on more debt to pass the next package, while Democrats want to ramp up spending.
BIG NUMBER
A staggering 26 million people have now filed for temporary unemployment benefits as a result of the crisis.
WHAT TO WATCH FOR
The CBO expects economic activity to pick up again in the third quarter as worries about the pandemic ease, but growth will be slow.
KEY BACKGROUND
Lawmakers scrambled to pass supplemental economic rescue legislation after the Paycheck Protection Program, one of the cornerstones of the $2 trillion CARES Act, exhausted its $350 billion in funding last Thursday after less than two weeks. The most recent package passed in the Senate and the House on Tuesday and Thursday, respectively, and was signed by President Trump on Friday afternoon.
This article originally appeared on Forbes.
