CBO sees the economy down 7% in second quarter and the jobless rate past 10%

Key Points
  • The Congressional Budget Office estimates that second-quarter GDP will show  decline of 7% while the unemployment rate rises past 10%.
  • That comes on the heels of worsening economic data amid the coronavirus-induced shutdown.
A man runs past the U.S. Capitol, December 9, 2019.
Loren Elliott | Reuters

Worsening economic data due to the coronavirus shutdown has led the Congressional Budget Office to downgrade its expectations for U.S. economic growth.

In revised figures released Thursday, the CBO said it now sees second-quarter GDP declining 7% and the unemployment rate topping 10% during the period, representing a severe upswing from its current 3.5% rate.

"CBO expects that the economy will contract sharply during the second quarter of 2020 as a result of the continued disruption of commerce stemming from the spread of the novel coronavirus," CBO Director Phil Swagel said in a post on the agency's site.

The downgrade to the employment outlook comes on the heels of two consecutive stunning rises in first-time unemployment insurance claims.

On Thursday, the Labor Department reported more than 6.6 million new claims, coming on top of the previous week's 3.3 million.  Both are easily the highest in U.S. history.

The CBO said future projections "are highly uncertain at this time" amid the evolving conditions related to the coronavirus.

The Labor Department reports March nonfarm payrolls numbers Friday. They are expected to show a loss of 10,000 from February's gain of 273,000. However, those numbers only take into account payroll activity through March 12, before the period of social distancing resulting from attempts to halt the coronavirus spread.