Business, Economics and Jobs

US budget deficit spooks economists


A group of economists warns that the U.S. budget deficit is now the biggest threat to the economy.



It's official: the U.S. budget deficit is now the biggest threat facing the world's biggest economy.

That's the word today, anyway, from The National Association for Business Economics. In a survey of its 47 panel members, the group said that the rising budget deficit is now a bigger worry than unemployment, inflation or even deflation.

The survey took place between Jan. 25 and Feb. 9. It uses a U.S. budget deficit forecast of $1.4 trillion, or lower than the $1.65 trillion the Obama administration is predicting for the current fiscal year.

As for inflation, the panel is less worried about the Fed's controversial QE2 plan to buy $600 billion in longer-term bonds. According to Reuters, most panelists now view that move as having either somewhat diminished the risk of deflation or having had no impact on inflation at all.

As for 2011 overall, the group is now forecasting a jump in U.S. gross domestic product of 3.3 percent this year. That's up from a November prediction of 2.6 percent.