Us says debt outlook worsening
The Obama administration yesterday acknowledged that the US recession had been cheeper and more damaging to the country'fiscal position than it had thought,and projected the budget deficit would be $2000bn higher over the next 10 years than forecast.
The impact of the white house's numbers were partly blunted by its announced reappointment of Ben Bernanke as Fed chairman,which was greeted warmly by the stock markets.But taken together with a seperate forecast yesterday by the independent Congressional Budget office,the announcements presented a bleak picture of America's deteriorating debt position.
The CBO released sharply higher defict projections predicting the 10-year deficit would reach $7140bn some $2700bn more than it had thought in march unlike the white house's calculations,the CBO estimate assumes all policies will say exactly as they are.
"If you include the administration's fiscal plans,this implies a deficit increas way in excess of 10 trillion dollars over the next decade---numbers are deeply alarming."said Bill Gale,a senior economist at the Brooking Institution.
The white house said the economy would shrink by 2.8 percent this year compared with its 1.2 percent estimate.
It also expects unemployment to pass 10 percent and stay higher than 8 percent until the end of 2011.
The new assumptions push the expected cumulaative 10-year deficit to $90501bn,as the downturn shrinks tax receipts and sucks resources from the government in the form of benefits and food stamps.
Peter Orszag, director of the white house's budget office,said the new data"underscores the direfical situation that we inherited and the need for serious steps to put our nation back on a sustainable fiscal path."The white house and CBO agreed that the US economy would start growing again by the end of the year.
Data yesterday suggested the recession could be petering our. House prices rose for the second month running in june.