US: Could the budget deficit hit double digits? – NBC

With the increasing calls of the US budget deficit, analysts at National Bank of Canada (NBC) recently released their research suggesting an increase in the figure.

Key quotes

A couple of weeks ago the White House National Economic Council Director Larry Kudlow hinted that “Tax Cuts 2.0” could be unveiled during the U.S. Presidential election campaign.

We’ll wait for more details before considering altering our 2020 U.S. GDP growth forecast which currently stands at 1.9%. But the very mention of tax cuts may not resonate as well as it used to with voters.

A recent poll conducted by the Pew Recent Center noted that more than half of Americans view the federal budget deficit as a “very big” problem. L

As today’s Hot Chart shows, under current law, i.e. before taking into account “Tax Cuts 2.0”, the CBO is projecting the federal budget deficit to increase to almost 6% of GDP by 2030.

That assumes no U.S. recession over the forecast horizon. In other words, should there be an economic downturn within the next decade-which will almost certainly dent revenues and boost expenditures via automatic stabilizers, the budget deficit as a % of GDP may well end up in double digits.