Feb. 1 (UPI) -- The nonpartisan Congressional Budget Office said in a new analysis on Monday that the U.S. economy should return to its prepandemic level sometime in the middle of 2021.
The outlook also projects the U.S. labor force to return to its former size in 2022, and a return to prepandemic employment levels is expected by two years later.
The analysis cited the coronavirus vaccines as the chief reason for optimism.
"Over the course of the coming year, vaccination is expected to greatly reduce the number of new cases of COVID-19," the report states. "As a result, the extent of social distancing is expected to decline.
"[The economy] is projected to return to its prepandemic level in mid-2021 and to surpass its potential level in early 2025. In CBO's projections, the unemployment rate gradually declines through 2026, and the number of people employed returns to its prepandemic level in 2024."
The outlook forecasts 3.7% growth in gross domestic product this year, an average of 2.6% growth over the next five years, inflation rising to 2% starting in 2023 and the Federal Reserve again beginning to raise key interest rates in 2024.
Monday's forecast is a marked improvement over the CBO's last outlook last summer, when it projected that the pandemic would cost the U.S. economy $8 trillion over 11 years.
The CBO said it will release a detailed forecast later this winter for its budget projections between 2021 and 2031.