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U.S. GDP will return to its pre-coronavirus level by mid-2021 — a quicker than expected recovery from the economy's pandemic free-fall, according to new projections by the Congressional Budget office.

Why it matters: The latest estimates from the nonpartisan office paint a rosier — though still not great — path for the U.S. economy.

Data: Congressional Budget Office; Note: Inflation (PCE price index) and GDP estimates show percent change from prior year, Unemployment shows estimated fourth-quarter level; Chart: Axios Visuals

Details: The unemployment rate is estimated to hit 5.3% by year-end — versus the 7.6% the CBO estimated in July. (As of December, the unemployment rate was 6.7%.)

  • Longer-term, the CBO projects that the Federal Reserve's preferred inflation gauge will average 1.9% between 2024 and 2031 — slightly below the Fed's 2% inflation target.
  • By a different gauge, the CBO sees inflation averaging 2.2% within that timeframe.

Yes, but: It will still be another three years before there are as many employed Americans as there were before the pandemic hit.

Between the lines: The projections don't factor in the stimulus measures proposed by the Biden White House — and there are questions about whether these rosy forecasts could hurt the administration's case for additional stimulus.

  • The CBO said the $900 billion relief bill signed into law in December would boost the level of real GDP by 1.5% this year and next — though the bulk of the impact will happen in 2021.

Go deeper

Dion Rabouin, author of Markets
Feb 1, 2021 - Economy & Business

Trump's trade war on China was a failure in every possible way

Illustration: Eniola Odetunde/Axios

The Biden administration plans to review the phase one U.S.-China trade deal, White House press secretary Jen Psaki said on Friday. Based on publicly available data, it's hard to imagine they'll find anything other than a debacle.

Driving the news: China isn't even close to fulfilling its end of the deal — having come up 42% short of its commitment, Chad Bown, a fellow at the Peterson Institute for International Economics, reported late last week.

Dion Rabouin, author of Markets
Feb 1, 2021 - Economy & Business

New home prices hit record high at end of 2020

Expand chart
Data: Census Bureau; Chart: Axios Visuals

The number of new homes sold in the U.S. reached its highest since 2006 last year, at 811,000, which is an 18.8% increase over 2019, the Commerce Department estimated.

The big picture: In December, new-home sales rose for the first time in five months, with the median price of a home reaching an all-time high of $355,900.

Biden explains justification for Syria strike in letter to Congress

Photo: Chris Kleponis/CNP/Bloomberg via Getty Images

President Biden told congressional leadership in a letter Saturday that this week's airstrike against facilities in Syria linked to Iranian-backed militia groups was consistent with the U.S. right to self-defense.

Why it matters: Some Democrats, including Sens. Tim Kaine (D-Va.) and Chris Murphy (D-Conn.) and Rep. Ro Khanna (D-Calif.), have criticized the Biden administration for the strike and demanded a briefing.