Thanks Barack… US Now Has Largest Percent Deficit to GDP of Any Developed Economy
Worst. Deficit. Ever.
The US has racked up a deficit that is 10.8% of gross domestic product this year. This is larger than any developed economy.
The US should make a ‘down payment’ this year on tackling its budget deficit, the International Monetary Fund has warned, as it emerged that the world’s biggest bond investor is shorting the country’s bonds.
America will rack up a budget deficit of 10.8pc of gross domestic product this year, the largest of any of the developed economies, the IMF said in its latest Fiscal Monitor report.
In sharp contrast to Britain and much of the rest of Europe, the US has so far delayed any move to cut its budget deficit. Instead, through a combination of extending tax cuts and a second, $600bn round of quantitative easing, Congress and The White House have focused efforts on trying to quicken a recovery that failed to take off last year.
Bill Gross, who manages the world’s biggest bond fund at Pacific Investment Management Co (Pimco), said it was the failure of politicians in Washington DC to take the country’s deficit – estimated to reach about $1.5 trillion next financial year – seriously that has prompted him to start positioning the $236bn Total Return Fund to benefit from a drop in US government bond. In February, the fund sold its US governments bonds, or Treasuries.
“Without attacking entitlements – Medicare, Medicaid and Social Security – we are smelling $1 trillion deficits as far the nose can sniff,” Mr Gross said in the firm’s monthly outlook.
US budget deficit already shot up 15.7 percent in the first six months of fiscal 2011 compared to last year.