Us Economy Emerges From Shadows of Its Mountainous Budget Deficit

Summary

---

IMAGINE the shock, if you were used to living in the shadow of two mountains, on waking up one day to discover one of them missing. So it must seem for those who lived with the American economy's "twin peaks". Warnings about the country's budget and current account deficits have been so prolonged and incessant it takes some adjustment on finding that one of them has shrunk quite drastically in size. These, remember, are at the heart of those "global financial imbalances" about which the IMF and OECD have continually warned.

The 'shrinking mountain' is the US budget deficit. Its huge size has cast a deep shadow across the economy for the past few years. It reached a peak of dollars 521bn, or 3.5 per cent of US Gross Domestic Product.

See the full content of this document

Extract

---

Us Economy Emerges From Shadows of Its Mountainous Budget Deficit

Loud and long did the alarm bells ring. Not only had President George W Bush set out utterly unnecessary and unproductive tax cuts for the rich, but these cuts would make the budget deficit that much worse. Last year the deficit fell to dollars 412bn, but the forecast for this year, made in February, was for a rise back...

See the full content of this document

---