Where the Economy Is Headed

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The Congressional Budget Office has a new report on the topic, with the usual caveat that it involves a lot of guesswork.

Two key indicators: Inflation-adjusted gross domestic product dropped 3.5 percent in 2020, but it’s expected to grow 4.6 percent this year and 2.9 percent next year before settling in around 2 percent annual growth. The unemployment rate, which was below 4 percent before the pandemic hit but averaged 8.1 percent last year, should be around 5 percent this year and gradually fall to 4 percent over the next several. For reference, 5 percent is a pretty low rate historically; it’s where we were in late 2015 and mid-to-late 2005.

After all that’s happened, it’s a decent outlook. The predictions are based on current law as of January 12, so they don’t include any further stimulus.

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