US Deficit Is Declining At Rapid Rate

The US economy is on the mend and with it the US Deficit is rapidly rebounding. According to Congressional Budget Office estimates, the GDP in 2013 will fall from more than 10 percent last year to 5.3 percent of GDP in 2013.

The CBO also estimates that by 2015 the US deficit will sit at just 2.4 percent.

Further, the CBO predicts that the national debt accumulated from annual deficits will fall to 73.1 percent of GDP by 2018, down from 76.3 percent today.

According to analysts, the declining deficit is thanks in large part to increasing federal revenue, which recently hit a 60-year low before increasing. Consumer spending has also began to rebound from its 60-year-lows.

The CBO also notes that President Obama and Congress have put into effect a $4 trillion deficit reduction plan that will help stabilize the US economy over the next 10 years. Last month, $1 trillion in forced budget cuts also went into play.

Experts warn that the US isn’t out of the deficit woods yet. Greg Valliere, chief political strategist at Potomac Research, tells CNN Money: “It would be naïve to think we’re out of the woods. At the end of the decade we’re back in the soup on entitlements. And debt servicing costs start to become a problem as well.”

Experts warn that the lack of future planning will likely increase deficits from 2016 through 2019. The US economy is likely to take a hit because of entitlement programs. The aging US population means that the number of people over 65 will increase to 19 percent of the population by 2029, up from just 13 percent today, according to the Government Accountability Office. The second consideration is health care costs which continue to increase in cost at a rapid rate.

As The Washington Post highlighted on April 10, much of the slowdown in the US deficit was already being witnessed in March 2013. According to The Post: “The U.S. federal budget deficit grew more slowly in March than the previous month, keeping the annual spending shortfall on pace to finish below $1 trillion for the first time in five years.”

The US Budget year runs from October 1 and during the first sixth months of that cycle the US deficit grew by $600 billion, far less than the $779 billion racked up in 2012 over the same time period.