U.S. CBO says budget deficit to reach $590 billion for fiscal 2016
Source: Reuters
Politics | Tue Aug 23, 2016 2:19pm EDT
U.S. CBO says budget deficit to reach $590 billion for fiscal 2016
By David Morgan | WASHINGTON
The U.S. budget deficit is expected to grow to $590 billion in fiscal year 2016 due to slower than expected growth in revenues and higher spending for programs including Social Security and Medicare, the Congressional Budget Office said on Tuesday.
The estimate, which is $56 billion larger than CBO's forecast in March, shows the deficit increasing in relation to economic output for the first time since 2009. CBO said the deficit is expected to be $152 billion higher than in 2015 and will equal 3.2 percent of economic output. ... The deficit peaked at $1.4 trillion in 2009 and shrank to $485 billion in 2014.
The nonpartisan research agency also said that debt held by the public will amount to nearly 77 percent of gross domestic product by the end of 2016, three percentage points higher than last year and its highest ratio since 1950.
....
The CBO said the forecast indicates tepid U.S. economic growth of only 1 percent for the first half of calendar year 2016 but predicted the economy would expand more robustly in coming months and create growth of 2 percent for the year and 2.4 percent for 2017. Faster growth will spur hiring, increase wages and put upward pressure on inflation and interest rates. ... But over the next 10 years, CBO said economic output would be restrained by a relatively slow increase in the U.S. labor supply.
....
(Reporting by David Morgan; Editing by Chizu Nomiyama and Alistair Bell)
Read more: http://www.reuters.com/article/us-usa-budget-cbo-idUSKCN10Y20R
CBO now expects deficit to rise to $549 billion, or 3% of GDP, from 2.5% in 2015
By Nick Timiraos
Nick.Timiraos@wsj.com
http://twitter.com/NickTimiraos
Aug. 23, 2016 2:00 p.m. ET
WASHINGTON—Budget analysts said Tuesday the U.S. will run a larger budget deficit this year because a slowdown in corporate profits will result in lower revenues than previously estimated.
For the fiscal year that ends next month, the Congressional Budget Office now expects a deficit of $549 billion, or 3% of gross domestic product, up from $500 billion, or 2.7%, in its estimate this past January. Both are up from last year’s $438 billion deficit, or 2.5% of GDP, which was the lowest since 2007.
Federal revenues are running less than 1% above their year earlier levels, the weakest rate of growth in three years, while outlays are running 5% higher. Most of the drag stems from falling corporate profits. Individual income taxes are expected to rise around 1% this year and payroll tax receipts are up around 5%. Corporate income tax payments, on the other hand, are down 13%, due partly to the extension of a series of tax breaks approved by Congress last December.
The CBO made two major changes to its last economic forecast from January: it now expects the economy to grow at a slower pace than previously expected, but it also expects interest rates to remain lower for longer. The downward revision in growth is expected to reduce government revenues by $400 billion over the coming decade, but the downward revision in borrowing costs will reduce federal spending by $1.1 trillion.
= new reply since forum marked as read
