Federal Deficit, Deficit | featured news

The new estimates paint a grim unemployment picture as the economy experiences a relatively jobless recovery.

The federal deficit through the first four months of the budget year is running at a record-breaking pace even though the deficit in January was slightly smaller than expected.

The White House and Congressional leaders are weighing options for reducing the federal deficit, including a bipartisan commission that could force tax increases and spending cuts.

The United States must reduce its budget deficit and Asian nations must encourage more consumption to prevent a recurrence of the global imbalances that contributed to the financial crisis, Federal Reserve Chairman Ben Bernanke said Monday.

The deficit is the largest relative to the size of the economy since 1945, underscoring the challenge to shrink the fiscal gap even as the White House considers more steps to stimulate a slow recovery.

The estimate, an increase from $7.1 trillion, was blamed on the unexpectedly deep economic downturn.

The Obama administration next week will project a federal budget deficit for fiscal 2009 of about $1.58 trillion, slightly less than previously predicted, a senior administration official said.

Nine months into the fiscal year, the federal deficit has topped $1 trillion for the first time.

The imbalance is intensifying fears about higher interest rates and inflation, and already pressuring the value of the dollar. There's also concern about trying to reverse the deficit -- by reducing government spending or raising taxes -- in the midst of a harsh recession.

Many Americans applauded the spending plans and tax breaks set out in President Barack Obama's record budget, while others questioned the yawning deficit it would entail.