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US economy cooling with October budget deficit, 55.6 billion

Wednesday, November 14th 2007 - 20:00 UTC
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US retail sales and producer price figures have pointed to a weakening of demand in the world's largest economy. The first month of the 2008 federal budget showed a 55.6 billion US dollars deficit.

The data comes as analysts are trying to gauge the impact of a slump in the US real estate market and the impact of a global credit crunch. According to the Commerce Department, retail sales rose by 0.2% in October, compared with September's 0.7% gain The Labor Department, meanwhile, said that producer prices added 0.1% last month, less than many market forecasts. The Treasury Department started the new budget year with an October deficit of 55.6 billion US dollars, up sharply from last year even though government revenues hit an all-time high for the month. The imbalance of the first month of the 2008 budget was 12.6% up from October 2006. The Congressional Budget Office is forecasting that the imbalance for the entire year will show an improvement from last year, when the deficit fell to 162.8 billion, a five-year low. The CBO forecast for 2008 is 155 billion. However the White House is anticipating 258 billion. The 2007 deficit for the budget year that ended September 30 was 34.4% lower than the 248.2 billion deficit recorded in 2006, reflecting faster growth in government revenues than spending. For October, revenues totaled 178.2 billion, up 6.3% from the same period last year. Government spending was up an even faster 7.7% to 233.7 billion, which was also a record for outlays for the month of October. The US federal budget outlook has improved in recent years because of strong revenue growth, reflecting the expanding economy. While revenues have risen for four consecutive years, private economists are forecasting slower growth in revenues this year, reflecting the slowdown in the economy caused by a severe slump in housing.

Categories: Economy, United States.

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