Believe it or not, the September monthly report of the Congressional Budget Office, the non-partisan government agency that provides independent analysis of the government’s accounts, showed that the federal deficit for the first 11 months of fiscal 2012-13 (October through August) was $753-billion (U.S.) – a massive $411-billion lower than at the same point a year earlier. With federal government revenues expected to have outpaced expenditures in September, the deficit looks on track to be in the range of $650-billion for the full fiscal year – a 40-per-cent drop from 2011-12 !! This is good news.
The US has unarguably a large debt issue that could come back and haunt them and the rest of the world in years to come. However, when economies recover and employment is improving, so are Government revenues. This is the fastest way to reduce debt. Remember the deficit woes of Canada in the mid 90s? We quickly recovered with the recovering economy. The US remains the most resilient and robust engine of world growth. For portfolio growth, you are well advised to hold a healthy serving of US equity in your portfolio.
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