The U.S. budget deficit is on the brink of being pushed higher than expected as anticipated tax cuts along with increased spending for hurricane victims and a higher debt limit weigh in.
The deficit is recently estimated to hit $750 billion in 2018, $900 billion in the year 2019 and $1.025 trillion by 2020. The new estimates represent an increase of $50 billion for the next year and $75 billion for the following two years individually. If the analysis is accurate, then they will exceed what the Congressional Budget Office expects.
White House officials insist that the proposal to lower business and individual rates will pay off through increased economic growth. Debt and deficits have been chronic major issues this year as Congress has debated the effects of the Trump administration’s tax reform plan, which can result to $1.5 trillion in relief.
“Through a combination of tax reform and regulatory relief, this country can return to higher levels of GDP growth, helping to erase our fiscal deficit,” Treasury Secretary Steven Mnuchin stated in a statement.
Mnuchin added that the tax reform plan will support the nation on a path to improve fiscal health and bridge prosperity for generations to come.
The Treasury Department released figures last week that projected the fiscal year 2017 ending with a $666 billion shortfall. This is lower than the $693 billion projection of the CBO. However the office expects a fall of $563 billion with the deficit in 2018 to hit $689 billion and $775 billion in the following two years.
CBO doesn’t believe that the deficit will pass the $1 trillion mark until 2022, when it’s already estimated at $1.03 trillion, and then expect it to keep rising by 2027 of about $1.46 trillion. The debt represented in 2017 is at 3.5 percent of the GDP, an increase of 0.3 percentage points from last year.
The 2017 debt represented 3.5 percent of GDP, an increase of 0.3 percentage points from the previous year.
U.S. Economy Will Fall behind Global Economy
Goldman Sachs released a note on Tuesday morning regarding the U.S. economy’s performance globally.
The note pointed out that the global economy is set to anticipate a steady growth with one surfacing exception. According to the firm’s research, there will be an annual global growth of 3.9 percent through 2020, but foresees that the GDP in the U.S. will decelerate to just 1.5 percent.
“Growth typically outperforms value in periods of solid but unspectacular activity” because “investors place a premium on growth stocks that are able to expand their top-line despite modest economic growth,” according to the note.
The U.S. Commerce Department’s official report showed U.S. growth at 3.1 percent after the second quarter of this year.
The firm also revealed 50 stocks best suited for the said global economic environment.
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