By Patricia L Johnson
The U.S. deficit has been a major topic of discussion, especially when it gets close to an election. The opposing party has continually used the deficit as a topic of conversation to indicate how poorly the U.S. economy is doing.
Pictures always speak louder than words and my original intent was to prepare a chart to show how the deficit, as a percentage of GDP, which is the defining number, has decreased continually over the past five-year period, but I found something better.
The non-partisan Congressional Budget Office (CBO) completed a report in April of 2014 which includes a chart showing this relationship. Along with the chart the CBO made the following statement:
As it usually does each spring, CBO has updated the baseline budget projections that it released earlier in the year. CBO now estimates that if the current laws that govern federal taxes and spending do not change, the budget deficit in fiscal year 2014 will be $492 billion. Relative to the size of the economy, that deficit—at 2.8 percent of gross domestic product (GDP)—will be nearly a third less than the $680 billion shortfall in fiscal year 2013, which was equal to 4.1 percent of GDP. This will be the fifth consecutive year in which the deficit has declined as a share of GDP since peaking at 9.8 percent in 2009 (see the figure below).
Since their April report was issued CBO updated their estimates on August 27, 2014 and are now projecting the deficit as a percentage of GDP to be 2.9 percent for 2014 rather than the 2.8 originally estimated. Since CBO uses actual numbers for past years and projected numbers for the current year, the 2.9 percent could go up or down, but as it stands right now our deficit as a percentage of GDP has dropped a full 6.9 percent over the past five years as follows:
Quite an achievement for this administration!
© 2014 Patricia L Johnson