Testimony, CBO, Statement of Douglas W. Elmendorf, Director, The State of the Economy and Issues in Developing an Effective Policy Response before the Committee on the Budget, U.S. House of Representatives, January 27, 2009.
“The economy is currently enduring a recession that started more than a year ago. CBO projects that, in the absence of any changes in fiscal policy, economic activity will contract more sharply in 2009 than it did in 2008 and the economy will grow at only a moderate pace in 2010. Under that projection, the shortfall in the nations output relative to its potential would be the largestin terms of both length and depthsince the Depression of the 1930s. Lost output would represent nearly 7 percent of the estimated potential output in both 2009 and 2010amounting to about $1 trillion in each yearand almost 5 percent of the potential in 2011. Payroll
employment declined by 2-1/2 million jobs last year, and CBO projects that, without further policy actions, even more jobs will be lost this year. The unemployment rate increased by more than 2 percentage points last year, reaching 7.2 percent, and is projected to peak at above 9 percent early next year.”
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