The unemployment rate in the US is expected to gradually decline and the number of employed people will return to the pre-pandemic level in 2024, the Congressional Budget Office (CBO) said.
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 a report titled 'An Overview of the Economic Outlook: 2021 to 2031' issued on Monday.
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, reports Xinhua news agency.
In its new economic forecast, the CBO projected 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.
GDP Growth Projection
According to the CBO, the country's real GDP is on track to grow by 4.6 per cent in 2021, following a 3.5 per cent contraction in 2020.
Noting that the labor 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 per cent, and the average unemployment rate between 2026 and 2031 will remain elevated at 4.1 per cent, much higher than the historic low of 3.5 per cent the country experienced before the Covid-19 pandemic.
The CBO 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.