MercoPress. South Atlantic News Agency

Mixed signals from the US economy

Good and bad news from United States. The federal budget deficit dropped to 250 billion US dollars in 2006, compared to the 318 billion of a year ago according to estimates released Friday by the Congressional Budget Office, CBO.

However a growing number of US corporations CEO believe the world's leading economy will experience a slowdown in the next six month according to a survey from the Conference Board and Business Council.

The latest estimate from the non partisan CBO is considerably below that of the White House 296 billion US dollars and from the CBO August estimates of 260 billion. Definitive figures are expected to be released next week by the Treasury Department and the White House.

According to CBO, its estimate based on daily reports from the Treasury Department and its own data, means the US budget deficit will be equivalent to 1.9% of GDP, below the 2.6% from fiscal 2005.

CBO said that revenue is estimated to have increased 11.8%, equivalent to 253 billion US dollars, which would represent the second highest figure since 1981. Income tax, the main source of revenue, jumped 120 billion US dollars or 13.1% in fiscal 2006.

The survey among seventy US top executives showed that 45.6% estimate that US economic conditions will worsen in the next six months, while 41.2% feel there's a recovery on the making. This is the first time in two years that those expecting improved conditions are overtaken by the worse prospect supporters. In the February survey the slowdown forecasters only represented 16% of the survey.

According to Kenneth Chenault, American Express CEO and a member of the Conference Board, survey results indicate a growing caution about the US and global economies and concern over profits. Energy price volatility, increasing interest rates and a cooling of the housing market are beginning "to take a toll on corporations' market and profit expectations".

The survey shows that 71.4% of the top business leaders interviewed believe the US economy will expand between 2.1 and 3% in 2007, while 24.3% expect growth below 2%.

This Friday also the Department of Labor announced that US unemployment rate in September dropped to 4.6% from 4.7% in September. However the number of new jobs created in September was 51.000 compared to the 188.000 of August and the 120.000 expected by analysts.