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Economy in Brief

U.S. Federal Budget Deficit Projections Falling From Lofty Heights
by Tom Moeller January 27, 2010

The latest estimates of the federal government's budget deficit were released yesterday by the Congressional Budget Office. Though this fiscal year's deficit estimate of $1.3 trillion was down slightly from 2009 due to the end of the latest recession, it remained near a record. As a percentage of GDP, the 9.2% deficit was near its peak and triple the 2008 figure.

With the end of the recession revenues are expected to rise 3.3% after the huge decline last year. Thereafter, as the economic recovery matures revenue growth is expected in the double-digits for both 2011 and 2012. Subpar growth in employment is expected, however, to hold revenue growth below recoveries. A subpar recovery in corporate profits also would contribute to low federal revenue growth.

This year the projected deficit would lift the national debt to $13.3 trillion. At 91% of GDP that is the highest level since 1950.

The CBO's latest budget projections are available in Haver's USECON database.

Budget Outlook 2010 from the Congressional Budget Office can be found here.

Ongressional Budget Office Projections 2009 2010 2011 2012 2013
Federal Budget Deficit ($ Billion) 1,414 1,349 980 650 539
    % of GDP 10.0 9.2 6.5 4.1 3.2
  Revenues -16.6 3.3 22.8 11.0 8.6
  Outlays 17.9 0.2 3.6 -1.0 4.0
Underlying Assumptions
   Nominal GDP -1.4 2.5 2.7 4.9 6.0
   Real GDP -2.9 1.6 1.8 3.9 4.9
   Consumer Price Index -0.3 2.4 1.4 1.2 1.1
   Unemployment Rate 9.3 10.1 9.5 8.0 6.3
   10-Year Treasury Note Rate 3.2 3.6 3.9 4.2 4.5
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