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CBO Projects U.S. Deficit To Grow By A Massive $1.5 Trillion This Year

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Feel broke yet? No? This might help: The Congressional Budget Office 2011 Budget and Economic Outlook forecasts the budget deficit to increase to $1.5 trillion this year.

(See what a trillion dollars stacked next to a person looks like!)

A few highlights from the report (get the entire report here):
  • Although recent actions by U.S. policymakers should help support further gains in real (inflation-adjusted) GDP in 2011, production and employment are likely to stay well below the economy’s potential for a number of years.
  • CBO projects that inflation will remain very low in 2011 and 2012, reflecting the large amount of unused resources in the economy, and will average no more than 2.0 percent a year between 2013 and 2016.
  • As the recovery continues, the economy will add roughly 2.5 million jobs per year over the 2011–2016 period, CBO estimates.
  • CBO projects that the unemployment rate will gradually fall in the near term, to 9.2 percent in the fourth quarter of 2011, 8.2 percent in the fourth quarter of 2012, and 7.4 percent at the end of 2013. Only by 2016, in CBO’s forecast, does it reach 5.3 percent, close to the agency’s estimate of the natural rate of unemployment (the rate of unemployment arising from all sources except fluctuations in aggregate demand, which CBO now estimates to be 5.2 percent).
  • The resulting federal budget deficit of nearly $1.5 trillion projected for this year will equal 9.8 percent of GDP, a share that is nearly 1 percentage point higher than the shortfall recorded last year and almost equal to the deficit posted in 2009, which at 10.0 percent of GDP was the highest in nearly 65 years.
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