Subscribe to the BlogUS economy faced a half a trillion deficit in the year 2008 which was the highest deficit since the tracking of records from World War II. Now Obama administration has created a record of sorts by going in for massive deficit funding of all the stimulus activities.
The total budget deficit for 2009 is now estimated to be over 1.4 trillion dollars, which is nearly three times the deficit of last year. Also the deficit has been necessitated due to the massive 800 billion dollar stimulus spending apart from the major deficit in tax collections.
Given the weak economic recovery and the rising unemployment, the analysts are now estimating the deficit for 2010 to remain above the 1 trillion dollars, as the government tax collections will again face a shortfall.
The government borrowings from the middle of 2010 could also become very costly, as countries would shy away from investing in the US bonds. The rating agencies could in fact go for a downgrade of the US bonds and the US economy by the middle of 2010.