Budget deficit in U.S. economists like list of no. 1 concern

Washington-the U.S. budget deficit is the gravest threat to the economy, topping high unemployment and the risk of inflation or deflation, according to a survey of forecasters released today.

The National Association for business economics said his 47-member Panel of forecasters boosted its estimate for the Federal deficit in 2011 to $ 1.4 billion to $ 1.1 billion in its previous survey in November.

"Panel continues to characterize the Federal over-indebtedness as their single biggest concern," with State and local government debt is the second largest concern, the survey said. It was conducted between January 25 and February 9.

The Panel forecast deficit is lower than the Obama administration's projection of a record $ 1.65 billion this fiscal year, or 10.9% of U.S. gross domestic product.

Although the White House budget proposes $ 1.1 trillion in deficit reduction over 10 years, Republicans in the House of representatives say that is not enough.

Republicans are pressured the Administration to reduce spending by $ 61bn since September, and the dispute threatens to quit the Government if the Democrats and the White House refused to go.

NABE panelists optimized their previous position on the decision of the Federal Reserve to pump more money into the economy by buying Government bonds.

Most speakers now view the Fed's decision to purchase an additional $ 600bn in longer-term Treasury securities as having both slightly diminished the risk of deflation or not have had any impact on inflation of any kind.

The November survey showed economists worried that the bond purchases could feed inflation.

Rapporteurs forecast inflation core, which excludes volatile food and energy prices to rise gradually from 0.8% in the last quarter of last year to 1.2% in 2011.

GDP growth for the year 2011 is expected to advance 3.3% year on year, up from the previous estimate of 2,6% of the Panel, the survey said.

"Growth factors, going forward include the pent-up demand for consumer and business, strong growth in foreign economies, especially those in Asia and monetary policy accommodative, supporting" NABE President Richard Wobbekind said in a statement.

"To restrain growth factors include financial turmoil, uncertainty about the economic policies of the future federal Government real estate market, a warm and sustained high unemployment," he said.

View the original article here