- Gennadiy Goldberg, U.S. strategist at TD Securities
The Congressional Budget Office expects that the budget deficit of the world's number one economy will shrink for a fifth consecutive year in 2016, marking the longest stretch of improvement since the surpluses of the late 1990s, as declining unemployment rate helps boost revenues. The fiscal shortfall will fall to $468 billion this year, or 2.6% of the nation's gross domestic product, compared with $483 billion in the year ended September 30 and $469 billion estimated in August. When the US President Barack Obama took office, the deficit amounted more than $1 trillion, whereas next year the gap is projected to be $467 billion, compared with $556 billion recorded in August. However, the budget deficit is seen swelling in coming years due to rising costs for debt and fast-retiring baby boomers. Republicans now in control of Congress aims to eliminate deficits within a decade with a reduction of social safety net programmes while lowering tax rates and increasing military spending. President Obama and Democrats have proposed new education and infrastructure spending and tax bonanza for middle-class Americans to set the agenda for the 2016 presidential election.
The CBO forecasts economic growth of 2.9% in the fourth quarter of 2015 compared with the previous year, a slower expansion that the 3.4% projected in August. In 2016 growth pace will remain the same as this year, the CBO projected.
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