April 13 (UPI) -- Debt held by the public will exceed the size of the U.S. economy by the end of fiscal 2020, a watchdog said Monday.
The United States already faced trillion-dollar deficits ahead of the coronavirus pandemic, the Committee for a Responsible Federal Budget said in its report. Now that debt will "grow much higher," as a result of the crisis and the relief aid money passed in legislation to address it.
The CRFB projects the deficit in fiscal 2020 will be more than $3.8 trillion or 18.7 percent of gross domestic product. The $3.8 trillion deficit is also more than 2.5 times the $1.4 trillion record set in 2009 following the economic downturn, called the Great Recession, from 2007 to 2009 after the U.S. housing bubble burst. It's also nearly four times the $984 billion deficit for fiscal 2019.
"The only time deficits have ever exceeded our projection for 2020 of 18.7 percent of GDP was in a three-year span during World War II -- reaching a high of 29.6 percent in 1943," the report said.
The annual deficit adds to the accumulated federal debt. By Oct. 1, the start of fiscal 2021, the watchdog group projects the U.S. debt will be larger than the U.S. economy, which was $21.4 trillion in 2019, according to the U.S. Bureau of Economic Analysis, and is projected to decline this year.
The U.S. debt is expected to grow from just under 80 percent of GDP prior to the crisis to just over 100 percent of GDP by October and exceed a prior record of 106 percent set after World War II by 2023.
"We project debt held by the public will exceed the size of the economy by the end of Fiscal Year 2020 and eclipse the prior record set after World War II by 2023," analysts said in the report.
The Congressional Budget Office had projected in January budget outlook the country's accumulated debt would hit 98 percent in 2030. Now, it's set to surpass that level by October, according to the CRFB.
The projection is based on the Congressional Budget Office's $134 billion cost estimate for the Families First Coronavirus Response Act and nearly $2.1 trillion fiscal 2020 cost for the Coronavirus Aid, Relief and Economic Security Act on top of other pre-crisis debt. It also includes an estimate of nearly $600 billion in additional deficit spending with higher unemployment and lower interest rates.
Before Congress passed the CARES Act, the annual deficit through March was already $743.6 billion, 7.6 percent higher than the same point the previous year. It was also projected to see its first $1 trillion deficit since 2012.
Analysts assumed "robust recovery" by 2020, and "full recovery to pre-crisis projections by 2025."