MercoPress. South Atlantic News Agency

US budget deficit down to 2,6% of GDP

United States budget deficit was down to 319 billion US dollars at the end of fiscal 2005, almost 100 billion less than last year's 413 billion US dollars reported Friday the US Treasury.

"Although deficits are not welcome, the fact that we end a fiscal year well below our forecasts is encouraging news", said US Treasury Secretary John Snow.

The 2005 fiscal year deficit (ended September 30) is closer to the Congressional Budget Office estimate of 317 billion that the White House's 333 billion. The 319 billion represent 2,6% of United States GDP. In 2004 it was 3,6% of GDP.

"Even when the effects of hurricanes Katrina and Rita will be felt in the short term, we're still on the right track to reach the president's objective of reducing budget deficits by half by 2009", added Mr. Snow.

According to Treasury figures expenditure was 2,473 trillion US dollars (a 7,9% increase over 2004) and income 2,154 trillion (14,6% increase) the highest in 20 years reports the Treasury.

"Lower taxes and pro-growth economic policies have created millions of jobs and a growing economy that has swelled tax revenues over the past year" highlighted Mr. Snow.

However, this year's deficit is likely to be swelled by another 30 billion spending on post-Hurricane Katrina reconstruction. Katrina costs According to figures from the US Treasury Department only 4 of the 62 billion allocated by Congress in emergency aid for Hurricane Katrina was spent in the last fiscal year.

The US economy has enjoyed robust growth, expanding by more than 3% in each of the past nine quarters, 3,3% in the latest available data from the second quarter of 2005.

Consumer spending - which accounts for about two-thirds of US growth - rose at a revised 3.4% in the second quarter, up from estimates of 3% and just down from the first quarter's 3.5% figure.

Meanwhile, White House economic adviser Ben Bernanke said on Wednesday that the storms could shave up to one percentage point off third-quarter growth. However, growth is also expected to bounce back when rebuilding starts.