The US budget deficit has fallen to just above $1.3tn over the last year to the end of September, marking a considerable decrease in deficit levels from 2009 and signifying the US economy’s slight, but pronounced, growth out of recession.
As the US economy continues to gain traction, the budget deficit has fallen by some £122bn over the period, now standing at a fraction under 9% of national GDP – a positive endorsement of the Obama administration’s controversial economic stimulus policies.
However, the current deficit rate still signals a borrowing level of 37 cents in the dollar – almost twice the rate of the 2013 target of 4.3% of GDP, which analysts across the political spectrum have recognised as a significant and ambitious target level.
While the announcement comes as a positive for the health of the US economy, it is nonetheless underlined by the persistently high unemployment figures, which have suppressed consumer spending and hampered much of the economic stimulus efforts and resources deployed elsewhere.
Likewise, state welfare payments have remained largely above target levels, funding the heightened unemployment brought on in the aftermath of the global recession as industries across sectors continue to grow at a sluggish, staggered pace.
While the US may have taken a different route to the large European economies, including the UK and Germany, both of which have implemented significant austerity measures in light of record budget deficits, the impact of the measures seems to be positive, and the signs of growth and recovery in the US economy auger well for the medium-term future of US business and consumer confidence.