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:
The CBO is also predicting high unemployment for the foreseeable future. The CBO predicts it will remain above 8% until at least 2014:
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:
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:
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):
Published or updated August 25, 2011.