CBO predicts a 40 percent GDP drop this quarter

The Congressional Budget Office has some pretty dismal predictions for the rest of the year.

In 2020's second fiscal quarter, which runs from April through June, the nonpartisan CBO expects the GDP to contract 39.6 percent year over year. That's an 11.8 percent drop from Q1, CBO predictions released Friday reveal.

The CBO chalks the massive Q2 contraction up to the ongoing coronavirus pandemic and "the social distancing measures put in place to contain it." It then predicts economic activity will restart in Q3, leading to a 5.4 percent growth year over year in that quarter, or a 23.5 percent jump from Q2. But the unemployment rate will only continue to grow through Q2 and Q3, hitting an estimated 14 and 16 percent, respectively, the CBO estimates. Things will only start to rebound in Q4, which the CBO predicts will close with an 11.7 percent unemployment rate.

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Recent efforts to mitigate these economic problems are expected to jack up the federal deficit to $3.7 trillion by the end of 2020, the CBO continues. The deficit will end up an estimated $2.7 trillion next year — both are up from the $1 trillion deficits the CBO predicted at the end of March.