The United States doesn’t settle for second best. And that’s never been more true than our beloved country’s ability to rack up record-setting deficits. Yesterday, the CBO released its projection that the country’s deficit this year would total $1.3 trillion (that’s $1,300,000,000,000.00).
For you history buffs, a $1.3 trillion dollar deficit is “only” the third largest deficit our country has ever experienced. As the CBO explained:
The United States is facing profound budgetary and economic challenges. At 8.5 percent of gross domestic product (GDP), the $1.3 trillion budget deficit that the Congressional Budget Office (CBO) projects for 2011 will be the third-largest shortfall in the past 65 years
So how then did the U.S. deficit set a record? It set a record because the two years in which we experienced higher deficits were 2009 and 2010. Thus, 2011 marks the first time in our country’s history that the deficit has exceeded $1 trillion three years running (queue streamers and party horns).
And while those numbers are mind-numbing, nothing speaks louder than a good chart depicting our profligacy. So here is a chart from the CBO depicting our financial folly:
History of Deficit Spending
The CBO is also predicting high unemployment for the foreseeable future. The CBO predicts it will remain above 8% until at least 2014:
Projected Unemployment Rate
There is some “good” news. The CBO projects that deficits as a percentage of GDP will decline over the next ten years. Unfortunately, a lot of these projects depend on tax and spending policies, including the expiration of the tax cuts initially passed during the Bush administration. Here’s the CBO chart of these projections:
CBO Deficit Projections
The CBO also believes interest rates will remain low (good for borrowers; bad for savers). That means that rates for “high” yield savings accounts are likely to remain under 1%. But it also means that mortgage rates and interest on car loans will remain near historic lows:
Projected Interest Rates
Finally, the slideshow below shows all of the charts that the CBO released yesterday (you can expand the charts by clicking the button at the bottom right of the image):
Rob Berger
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Published or updated August 25, 2011.
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The saddest stat for us is that we’ll be continuing to earn so little on our cash savings. Since that’s our biggest worry, I know we’re blessed.