U.S. posts smallest budget deficit in five years
Surge in new jobs helping to propel once-sluggish economy
Amid all the gloom and doom - some good financial news, finally. The U.S. posted its smallest budget deficit in five years as employment gains helped propel revenue to a record. Consumer spending exceeded by $680.3 billion in the 12 months that ended September 30, the narrowest gap since 2008.
Increased hiring has helped reduce the country's deficit as a share of gross domestic product by more than half in the past four years.
Increased hiring has helped reduce the country's deficit as a share of gross domestic product by more than half in the past four years. Bolstering revenue this year were higher payroll taxes Congress allowed in January. Sequestration, across-the-board cuts has been since March.
"We've made a lot of fiscal progress in the U.S. because of the sequester cuts, tax rates going back to historic norms and the economy improving," Bricklin Dwyer, an economist at BNP Paribas in New York says. "Politicians have, thus far, avoided the most difficult choices -- addressing unsustainable spending on entitlements such as Medicare and Medicaid."
In addition, revenue jumped 15.2 percent to $301.4 billion in September from a year earlier. This increase brought the annual figure to $2.77 trillion. Spending increased 21.5 percent to $226.4 billion last month, contributing to a 12-month total of $3.45 trillion, it showed.
The unemployment rate fell to an almost five-year low of 7.2 percent in September. According to the Labor Department, payrolls have grown by 1.6 million workers so far this year.
"Our deficits are getting smaller," President Barack Obama told high school students in Brooklyn last week. "We don't have to choose between growth and fiscal responsibility; we've got to do both."
A new budget agreement is being hammered out by Congress after a battle between Tea Party-allied Republicans and the Obama administration over limiting debt led to partial suspension of federal operations earlier this month.
It must be noted that mandatory cuts don't touch benefit payments for programs such as Social Security, Medicare and Medicaid. Many Republicans want to replace the automatic cuts with reductions in spending on these entitlement programs that account for most of the nation's long-term debt.
However, Democrats, which include the president have indicated they're open to some of these ideas as long as they are paired with new tax revenue, which Republicans oppose.
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