The Federal Budget Deficit Is Back to Normal
The federal budget deficit has narrowed sharply, and is back to relatively normal levels.
With the government’s budget year having concluded at the end of September, the Congressional Budget Office now estimates that the deficit for 2014 was 2.8 percent of G.D.P., down from 4.1 percent last year. The deficit is now smaller than its average over the past 40 years of 3.1 percent.
The size and speed of the decline has come as a surprise to many forecasters. As recently as February 2013, this year’s deficit was expected to be 3.7 percent of G.D.P. The deficit has declined in each of the past five years, and is now markedly smaller than the deficit (9.8 percent) registered in the 2008-09 fiscal year.
As the economic recovery continues, the deficit is expected to narrow even further next year. Based on current projections, the average deficit through President Obama’s second term will be smaller than it was through President Reagan’s second term.
