The White House predicted a budget deficit worth 1.21 trillion dollars in 2012, 116 billion dollars less than what was expected in February. It also predicted a slight decline of growth, considering that the U.S. GDP will increase by 2.6% during the years 2012 and 2013, as the unemployment rate will increase slowly to reach 7.6% by the end of 2013.
Great Difficulties
The White House forecast came in the wake of a report released by the U.S Commerce Department which showed that the U.S. economy grew by a limited rate of 1.5% in the fourth quarter. Jeffrey Zients, acting director of the Office of Management and Budget at the White House, argued in a statement released with the report: "economy is still facing great difficulties which have slowed growth and restricted the increase in employment."
Wealth
U.S wealth volume recorded a jump of 4.1% in the last quarter of 2011 and it did not cease to drop down since then. This indicator, which was published at the height of the American presidential election campaign, triggered radically different interpretations of the two teams competing in the race to the White House.
GDP
Republican Reince Priebus said that "the weak gross domestic product is bad news for U.S families who are going through difficulties."
Economic adviser Alan Krueger had a different interpretation to tell President Barack Obama: "the economy continues to lead in the right direction," but added it will be "necessary" to achieve further growth.
Yet, Dean Baker, from the Center for Policy and Economic Research in Washington, argued that "there are few things in this report that promise hope for significant acceleration of growth."
Large uncertainty
Harm Bandholz from UniCredit was less pessimistic as he expected a "leap" in the third quarter. He was, nonetheless, worried about the large "uncertainty" that is attached to the global economy and the "tax wall" in the United States, as the tax deductions associated with reductions in public spending will be completed by late 2012.
Precautions
The situation of the U.S. economy predicted in the second quarter is urging cautions. Despite the continuous increase in the unemployment rate reaching 8.2%, families’ consumption, particularly of services, was held relatively stable at 1.5% from April to June, securing 70% of the rise in gross domestic product.
Nonetheless, gross domestic product slowed down compared to the previous three months as it rose to 2.4%, at a time when progress income available to families slowed slightly. The surprising good news comes from the exports, which rose by 5.3% during the quarter, compared to 4.4% over the previous three months.
One point brings together the analysts to an agreement, that after such index, which came as less worse than foreseen, U.S. central bank (Federal Reserve)- who on Wednesday will draw the main outlines of its fiscal policy – is expected to take precautions before deciding on any new measures to revive the economy.