The U.S. economy will see a slightly deeper contraction this year but a bigger rebound in 2021 than previously forecast, according to updated estimates from the Congressional Budget Office.

The non-partisan agency’s latest economic projections on Thursday showed gross domestic product will shrink 5.9 per cent in 2020 and grow 4.8 per cent next year on a fourth-quarter-to-fourth-quarter basis. In its May 19 estimate, the CBO had projected a 5.6 per cent decline this year and growth of 4.2 per cent in 2021.

The agency said it expects slightly more improvement in the job market this year and next, though it will remain much weaker than it was prior to the coronavirus pandemic. The unemployment rate is seen averaging 10.6 per cent this year and 8.4 per cent in 2021, better than prior forecasts of 11.5 per cent and 9.3 per cent, respectively.

The forecasts incorporate information available as of June 26, before the stronger-than-expected job gains reported earlier Thursday.

The effects of the pandemic-related lockdowns on the economy will linger for years to come, particularly for those just entering or new to the labor market. The CBO sees unemployment averaging 6.3 per cent in 2023-2024, with GDP growth rates averaging 2.2 per cent.