News Note: US Budget Deficit Situation Improves

While the US debt situation is problematic and everyone agrees is not sustainable in the long term, an increase in revenues has eased the short term burden. Reuters provides an update in this article. Below are some quotes from the article.

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"The U.S. budget deficit is likely to fall by $60 billion in 2015 due to strong revenue gains, the Congressional Budget Office said on Tuesday, enabling the government to stave off default without a debt limit hike perhaps through early December.

The CBO said it now estimates a $426 billion deficit for fiscal year 2015, down from its $486 billion forecast made in March. It also forecast a fiscal 2016 deficit of $414 billion, a reduction of $41 billion.

The new forecast would bring the deficit to its lowest dollar amount since 2007, and as a 2.4 percent share of U.S. economic output, it would be below the 50-year average.

The deficit peaked at $1.4 trillion in 2009 and shrank to $485 billion in 2014."    . . . . . .

"The CBO also revised its forecast for real gross domestic product growth for 2015 to 2.3 percent from 2.8 percent, bringing it in line with private forecasters. The data used for the changes, however, was locked on July 7, before the start of a global sell-off in financial markets sparked by worries about China's economic slowdown.

The revised forecasts do not change the CBO's view that based on current tax and spending laws, deficits will start to rise again later in the decade due to the costs of caring for the rapidly aging Baby Boom generation, topping $1 trillion again by 2025."
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Added note: Along with this news we have GDP for the 2nd quarter of 2015 revsised sharply higher and the Atlanta Fed GDP Now with a higher 3rd quarter GDP estimate than they had a few weeks ago. None of this news supports the idea that a severe crisis is imminent. Over the next 2-3 months, someone is going to be significantly wrong on the severe crisis forecast. Either we get one and the mainstream analysts are taken by surprise or we don't get one and the alternative analysts projecting one are surprised. We will follow it here to see what actually happens. If we get no major crisis by year end 2015, it will likely be time to re-evaluate the future of this blog, at least in terms of the frequency of articles posted.