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White House, Congressional Analysts Predict Record Deficit
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By VOA News
25 August 2009
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 | The White House
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The White House and Congressional Budget Office are predicting the U.S.
federal deficit will grow to $1.6 trillion in the current fiscal year.
As a share of the economy, that is the biggest federal deficit to hit the United States since World War II.
But the White House and Congress differ over a 10-year forecast for the deficit.
The
White House Office of Management and Budget is predicting the federal
deficit will reach $9 trillion in the next decade - $2 trillion higher than its previous estimate.
Meanwhile, the
non-partisan Congressional Budget Office lowered its estimate of the
government's 10-year budget deficit to just over $7 trillion.
The lower figure is based on projections of an economic recovery and low inflation.
The
government often operates with a deficit. But the two wars in Iraq and
Afghanistan, and the financial crisis, have pushed the deficit to new
highs.
Some economists say the U.S. financial crisis was caused in part by a collapse in the housing market.
An
index of home prices in 20 major U.S. cities showed Tuesday that home
values rose for the first time in three years during April, May and
June.
The index - the Standard & Poor's - Case Shiller
housing index - rose nearly three percent from the first quarter. Still,
it is down nearly 15 percent from the same period last year.
A
second report by the Federal Housing Finance Agency shows home prices
rose 0.5 percent from May to June, but fell 6.1 percent from a year
earlier.
Changes in home values can affect consumer spending.
Analysts consider a rise in prices a good sign that the market is
starting to recover.
A separate survey released Tuesday by
the U.S. Conference Board says the confidence consumers have in the
economy and job market improved significantly in August.
The
Consumer Confidence index rose to 54.1 percent, up from 47.4 percent in
July. The survey associates the number 90 to a healthy economy, and 100
to strong growth.
Economists closely watch confidence as an
indication of future consumer spending, which accounts for more than 70
percent of all U.S. economic activity.
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