(CNSNews.com) -- The Congressional Budget Office (CBO) estimates that the national unemployment rate will average nearly 14% in this year's second quarter, and for fiscal year 2020, which closes at the end of September, the federal deficit is projected to be $3.7 trillion.
As the CBO reported today, the U.S. economy will experience "a sharp contraction" in the second quarter of 2020 (April, May, June) and include the following,
- Inflation-adjusted gross domestic product (real GDP) is expected to decline by about 12% during the second quarter, equivalent to a decline at an annual rate of 40%for that quarter.
- The unemployment rate is expected to average close to 14% during the second quarter.
- Interest rates on 3-month Treasury bills and 10-year Treasury notes are expected to average 0.1% and 0.6%, respectively, during that quarter.
In addition, for fiscal year 2020, the CBO foresees the following,
- The federal budget deficit is projected to be $3.7 trillion.
- Federal debt held by the public is projected to be 101% of GDP by the end of the fiscal year.
The CBO is more upbeat about the third quarter (July, August, September).
"In the third quarter, economic activity is expected to increase, as concerns about the pandemic diminish and state and local governments ease stay-at-home orders, bans on public gatherings, and other measures restraining economic activity," said the CBO.
"However, challenges in the economy and the labor market are expected to persist for some time," the office reported. "Interest rates on federal borrowing are expected to remain quite low in relation to rates in recent decades."
"[E]economic growth is expected to average about 17 percent at an annual rate in the second half of calendar year 2020," said the CBO. "Increases in consumer spending are expected to more than offset further declines in business investment during that period."