The US budget deficit will hit nearly $1,200bn this fiscal year – about 8.3% of GDP – even without the cost of Barack Obama’s planned fiscal stimulus, the Congressional Budget Office warned Wednesday. The caution came as the president-elect said the stimulus package would be at the “high end of our estimates” – implying close to $775bn over two years, a figure that could push the US fiscal deficit close to or over 10% of GDP. However, the CBO warned, without policy changes such as a large stimulus, the economy would contract by 2.2% in 2009.

This entry was posted by Gwen Robinson on Thursday, January 8th, 2009 at 5:47 and is filed under Capital markets. Edit this entry.