The federal budget deficit has fallen sharply during the past few years, and it is on a path to decline further this year and next year. CBO estimates that under current law, the deficit will total $514 billion in fiscal year 2014, compared with $1.4 trillion in 2009. At that level, this year’s deficit would equal 3.0 percent of the nation’s economic output, or gross domestic product (GDP)—close to the average percentage of GDP seen during the past 40 years.The (sort of) good news: "From a policy perspective and using these projections, further short term deficit reduction is not a priority."
Calculated Risk
CBO Projection: Budget Deficit to be below 3% of GDP for next four years
Bill McBride
With the global economy apparently contracting, NX can't be expected to add much, and it's not yet clear how green the shoots are for I, with demand constrained by stagnant income and a reluctance of consumers to go deeper in debt creating a drag on C. With G contracting that could be a problem with Y for the US and world economies.
The source of most of the growth in NX was quite simple. Our gas was cheaper, so multi-nationals like CNOOC, Shell, Noble, Bayer, BP and the others ramped up production of chemicals, plastics and fuels in the United States refineries while idling their complexes in Rotterdam, Nanjing and Dalian.
ReplyDeleteThe point being that foreign demand has little to do with export growth, segmented energy markets provide arbitrage opportunities.
Once trade balance is factored in that puts the domestic private sector surplus at less than 1%, possibly even into deficit territory.
ReplyDeleteWe all know what that will mean.