The Office of Management and Budget released its mid-year review Thursday, lowering this year’s projected deficit to $1.316 trillion, a 20 percent drop from the $1.645 trillion deficit projected in February.
According to OMB estimates, the new deficit is projected to equal 8.8 percent of the gross domestic product. February estimates said the deficit would equal 10.9 percent of the GDP.
“This alternate forecast shows that while recent economic turbulence is a major concern because of the impact on individuals, families, and businesses, short- and long-term budget projections have not changed significantly because of it,” OMB Director Jack Lew wrote on the White House blog.
OMB also projected economic growth to see little improvement. OMB projected GDP growth for this year at 1.7 percent, compared with 2.7 percent expected in February.
The forecast for 2012 sees only a 2.6 percent GDP growth, down from February’s estimate of 3.6 percent growth.
Unemployment is expected to average at 9.1 percent for this year and 9 percent in 2012, OMB said.
Reuters reports the review hints at what President Barack Obama could say in his address to Congress Sept. 8. The speech could include proposals for tax cuts aimed at middle-class families, infrastructure spending and aid for the long-term unemployed.