This Year's Federal Deficit: About 10% of the GDP
Oct 5th 2010 9:00PM
Updated Oct 5th 2010 9:12PM
It seems the federal deficit this year looks about the same as it did last year. According to remarks prepared for a New York conference (via Bloomberg News), Mary Miller, assistant secretary for financial markets at the Treasury Department, said the deficit will amount to the equivalent of approximately 10% of the U.S. gross domestic product for the fiscal year, which ended Sept. 30.
That's a "similar or slightly lower percentage of GDP" than it represented in the previous fiscal year, Miller said. The recession led to less U.S. tax revenue for the 2009 fiscal year, while government spending increased the deficit to $1.4 trillion, according to the Bloomberg article. Still, Miller added that the U.S. is unlikely to dip into a second recession.
The economy's slow growth is forcing Federal Reserve officials to consider boosting its purchases of Treasury bonds in order to cut the cost of borrowing, which they hope would in turn spur economic development. In the past week, presidents of the Federal Reserve banks in Chicago and New York have urged the Fed to buy more bonds. Miller said that any such action by the Federal Reserve wouldn't affect the way the Treasury manages its debt.