The U.S. budget deficit has shrunk to the smallest amount since 2008, according to new data from the Congressional Budget Office (CBO). But hold the applause — if the trend is to continue, politicians in Washington need to get to work. CBO projections expect next year to be another low, but if current laws don’t change, that deficit will climb between 2015 and 2024 up to $1 trillion.
The CBO is estimating that the budget deficit in fiscal year 2014, which ends September 30, will be $492 billion, continuing to decline from last year’s $680 billion shortfall. The deficit in fiscal 2014 is projected to be 2.8 percent of gross domestic product, compared with 4.1 percent in 2013.
“Deficits are rapidly declining,” Paul Edelstein, director of U.S. financial economics at IHS Global Insight, said, per Bloomberg. “A lot of it is coming on the revenue side, mostly from taxes — there were increases in payroll taxes last year, which are still being felt this year, corporate profits are up and they are paying more in taxes.”
Bloomberg cites an upturn in employment for the numbers, noting the dip in unemployment (6.1 percent in June) and an addition of 288,000 in payrolls last month. If the trend continues, this year would be the best in terms of job gains since since 1999.