The federal budget deficit is projected to be 3 percent of gross domestic product in fiscal year 2014, barring changes to laws governing taxes and spending.
That translates to a $514 billion deficit, according to a report the Congressional Budget Office released yesterday on the budget and economic outlook for 2014 through 2024. The federal budget deficit in fiscal year 2013 was 4.1 percent of GDP, or $680 billion.
“A stronger economy, lower unemployment, higher tax revenue and payments from mortgage-finance companies Fannie Mae and Freddie Mac are helping the U.S. narrow the gap from the 2009 record shortfall of $1.4 trillion,” Kasia Klimasinska reported for Bloomberg News.
The deficit is projected to fall to 2.6 percent of GDP in fiscal year 2015 and then rise later in the decade, the CBO report said. Spending on Social Security, Medicare and other health programs are projected to eat up a bigger share of the federal budget as the U.S. population ages.
Though the economic recession ended in June 2009, the labor market remains weak. While the unemployment rate fell to 6.7 percent in December, the lowest since October 2008, it’s still high by historical standards.
There are about 4 million people who have been out of work for 27 weeks or more, a long-term jobless rate of 2.6 percent that’s “extraordinarily high,” the CBO said in a separate report on the slow recovery of the job market. There were about 1.3 million long-term unemployed people before the recession.