WASHINGTON, Aug. 19 (Xinhua) -- The U.S. federal budget deficit will exceed 1.3 trillion dollars in fiscal year 2010, the second largest shortfall in 65 years, just below the 2009 level, the U.S. Congressional Budget Office (CBO) said on Thursday.
The U.S. budget gap is expected to be about 1.34 trillion dollars for the year ended September, 71 billion dollars below last year's total, when the shortfall reached the highest level since the end of the second World War, the nonpartisan CBO said in its updated report on the budget and economic outlook.
The latest deficit projection is 27 billion dollars lower than the amount that CBO projected in March 2010, when it issued its previous estimate. The narrowed gap is primarily due to an expected increase in government revenues and a reduction in fiscal spending.
After falling sharply during the recession, revenues are projected to increase for the first time in three years, rising about 2 percent. Outlays, which have grown rapidly in recent years because of the recession, the turmoil in financial markets, and policies enacted in response to those events, are expected to decline by about 1 percent, according to the updated projection.
Through the first ten months of this fiscal year, the budget gap totaled 1.17 trillion dollars, down from a deficit of 1.27 trillion dollars for the same period in 2009, according to the Treasury Department.
With respect to economic outlook, the CBO projected the U.S. economy will grow 2.8 percent in fiscal year 2010 and slow down to 2.0 percent in 2011.
"The recovery from the economic downturn will continue at a modest pace during the next few years," said the report. "Growth in the nation's output since the middle of calendar year 2009 has been anemic in comparison with that of previous recoveries following deep recessions, and the unemployment rate has remained quite high, averaging 9.7 percent in the first half of this year."
Unemployment rate will decline slowly, falling to 9.3 percent at the end of 2010 and 8.8 percent at the end of 2011, said the report. After that, the growth in employment will accelerate, and the jobless rate will decline more rapidly, reaching 5.1 percent at the end of 2014.
The jobless rate remained stubbornly high at 9.5 percent in July, and nonfarm payrolls have fallen for two straight months, according to the Labor Department. So far this year, private sector has added an average of 90,000 jobs per month, compared to nearly 8.5 millions jobs lost during the recession.