Deficits
in sentence
2171 examples of Deficits in a sentence
On this view, significant and rapid reductions in government
deficits
and debt are a precondition to restoring government credibility and investor confidence, stemming contagion, bringing down interest rates, and reviving economic growth.
In the short to medium run, fiscal consolidation – whether in the form of cutting government spending or increasing revenues – results in lower output and employment, which means lower tax collection, higher deficits, and escalating debt relative to GDP.
Savvy investors, like frustrated voters, recognize that low growth and high unemployment actually enlarge
deficits
and add to debt in the short run.
A painful deleveraging process implies that private and public spending need to fall, and that savings must rise, to reduce high
deficits
and debts.
The ensuing massive bank bailout, plus continued budget
deficits
and declining nominal GNP, means that Ireland’s debt is ballooning, while its capacity to pay has collapsed.
The United States, by contrast, has pursued expansionary and growth-oriented macroeconomic policies since the 2007-2009 financial crisis, despite massive budget
deficits.
This is especially true in India, Brazil, Turkey, South Africa, and Indonesia, all of which suffer from multiple macroeconomic and policy weaknesses – large current-account deficits, wide fiscal deficits, slowing growth, and above-target inflation – as well as growing social protest and political uncertainty ahead of elections in the next 12-18 months.
There are no easy choices: defending the currency by hiking interest rates would kill growth and harm banks and corporate firms; loosening monetary policy to boost growth might push their currencies into free-fall, causing a spike in inflation and jeopardizing their ability to attract capital to finance their external
deficits.
Meanwhile, most other eurozone countries have lately been forced to tighten fiscal policy, thereby reducing or eliminating their current-account
deficits.
The problem arises because America’s chronic saving shortfall has now moved into the danger zone, making it much more difficult to fund multi-year
deficits
today than was the case when cutting taxes in the past.
That is what brings the balance-of-payments and trade
deficits
directly into the debate over fiscal policy.
With fiscal
deficits
likely to push an already-low domestic saving rate even lower – possibly back into negative territory, as was the case from 2008-11 – there is a great risk of a sharply higher current-account deficit.
Far from vanishing into thin air, federal budget
deficits
ballooned to 3.8% of GDP during the 1980s, taking public debt from 25% of GDP in 1980 to 41% by 1990.
On the heels of the budget
deficits
of Reaganomics and the related plunge in national saving, the current account swung sharply into deficit, averaging -2.4% of GDP from 1983 to 1989.
Lacking in saving, outsize US budget
deficits
point to sharp deterioration on the balance-of-payment and trade fronts.
In 2003, all three large eurozone countries (France, Germany, and Italy) were running
deficits
in excess of 3% of GDP, the upper limit established by the SGP.
The ministers subsequently moved to reform the SGP, shifting the focus from headline
deficits
to a measure of the fiscal position that takes into account the state of the economy.
And continuing high unemployment in many countries may seem to be a more urgent economic issue than reducing
deficits.
In a country with large fiscal deficits, the central bank may have to keep interest rates high to control inflation.
In a multilateral trading system, large bilateral trade
deficits
are often balanced by bilateral surpluses with other countries.
They are also the result of government decisions: how much to tax and spend (which determines the amount of government savings or deficits), investment regulations, exchange-rate policies, and so forth.
If the IMF’s analysis of global imbalances is not balanced, if it does not identify the US as the major culprit, and if it does not direct its attention on America’s need to reduce its fiscal
deficits
– through higher taxes for America’s richest and lower defense spending – the Fund’s relevance in the twenty-first century will inevitably decline.
Add to that plans to subsidize infrastructure investment and increase military spending, and it seems likely that the US will face rapidly rising fiscal
deficits
and a huge short-term increase in demand.
“Reaganomics” produced large fiscal
deficits
and an ultra-strong dollar.
Trade
deficits
and surpluses also matter, as do stock-market and property valuations, the cyclical outlook for corporate profits, and positive or negative surprises for economic growth and inflation.
A new study by the non-partisan Committee for a Responsible Budget presents a very different outlook for US
deficits
and debt from the one contained in Trump’s budget blueprint.
It estimates that under realistic economic assumptions from the CBO, debt in Trump’s budget would remain roughly at current levels, rather than falling precipitously (as
deficits
would remain above 2% of GDP, rather than disappear by 2027).
To state the obvious, lower interest rates imply lower debt servicing costs, which in turn mean lower nondiscretionary outlays, smaller deficits, and lower debt.
And with higher interest rates comes a heavier debt-service burden (substantially heavier than in the past, given current debt levels), wider deficits, and higher debt.
Now, due to appalling fiscal policy on the part of George W. Bush’s administration and some bad luck, the US economy has wedged itself into a very uncomfortable position, hemmed in by its huge budget and trade
deficits.
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