The US budget deficit for the month of May is less than anticipated and also almost 30% less than the deficit experienced last year in the month of May.
However, the US Federal Reserve Chairman, Ben Bernanke warned that the Government needs to take steps in order to tackle the big amount of budget deficit. He pointed that if steps to tackle the deficit were not taken, it could threaten the entire US economy.
Economic experts have already expressed fears over the mounting US budget shortfalls. They point out that these deficits can severely hamper the overall growth of the economy and make it more difficult for the Government to focus on growth and creating more jobs.
The overall budget deficit is expected to touch $1.3 trillion this year. This is still less than last year when this figure touched an all-time high of $1.4 trillion.
It is argued by economic experts that high deficits mean that the Government pays a high rate of interest on the country’s debt. High levels of deficit also make a country less competitive and make it difficult to increase employment levels.
The US economy was also severely impacted by the global economic crisis and the economy is still hampered by lower growth and lack of business confidence.
It is expected that the pace of US economic recovery will improve as the global economy is also recovering and business confidence will lead to more spending and employment growth in the coming days.
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