The U.S. Congressional Budget Office said Friday that it expected the federal budget deficit to hit USD 3.7 trillion for the 2020 fiscal year, which would be its largest size as a share of the economy since World War II.
This feature is a courtesy by guest authors from the New York Times.
In a new round of forecasts that officials cautioned were highly uncertain amid the coronavirus pandemic, the budget office said it expected the economy to shrink by 5.6 % over the course of this year, ending 2020 with an unemployment rate of nearly 12 % .
The budget office said it expected a historic drop in economic activity to be recorded this spring, but that recovery will begin to set in as social distancing measures are relaxed but not eliminated at the end of June.
Stocks rallied on Friday, as a week of dramatic turns in the financial markets came to a close.
The S&P 500 rose more than 1 % by Friday, April 24, 2020, afternoon, bucking a global decline. Shares in Europe and Asia had fallen earlier.
The focus among traders in the United States this week has been oil prices after the American benchmark for crude crashed into negative territory on Monday — a move that broke through the relative calm that had settled over financial markets. On Tuesday, stocks suffered their sharpest drop in three weeks after the dive in oil prices, and even after rebounding slightly the S&P 500 is still on track to end the week with a loss.
Oil prices also rose on Friday adding to a sharp rebound earlier in the week. Still, they remain near historic lows amid concerns about oversupply.
Stocks are of course subject to sudden changes in sentiment or reversals in efforts to reopen economies. Economic and corporate data continues to outline the toll the coronavirus has taken on the global economy, and American officials emphasized that recovery would be difficult. On Friday, new data showed that the near-shutdown of the economy has pushed U.S. manufacturing into a free-fall.
And even as some companies begin to consider reopening factories, they face opposition in some quarters. For example, the United Automobile Workers union said on Thursday that it was opposed to companies restarting auto production next month, saying it was not yet safe for its members to return to work.
President Trump signed into a law on Friday, April 14, 2020 a USD 484 billion coronavirus package that would revive a depleted loan program for distressed small businesses and provide funds for hospitals and testing.