Economists' biggest worry: Federal budget deficit

By Chris Isidore, senior writer


NEW YORK (CNNMoney) -- Government deficits are the biggest long-term worry of top U.S. economists, according to a survey released Monday.

The survey of 47 top economists by the National Association of Business Economics predicted that the Federal deficit will jump to $1.4 trillion in the fiscal year ending in September. In the November survey, the economists had forecast a $1.1 trillion deficit.

The economists' forecast is a bit more optimistic than the latest projection of a $1.5 trillion gap from the nonpartisan Congressional Budget Office.

The previous survey was taken before Congress agreed to extend Bush-era tax cuts for all income brackets and have a one-year holiday on a portion of the payroll tax. The payroll tax holiday, which hadn't been widely expected, by itself added about $112 billion to the federal deficit.

Asked to rank the seriousness of various economic problems, with one meaning no concern and five equaling extreme concern, the federal deficit was the biggest worry, with an average score of 4.1.

State and local government budget deficits and debt was the second biggest worry with a score of 3.4.

The survey results come as fierce debates are raging in Congress and in statehouses across the nation about how to address gaping budget gaps. There is a chance the federal government could even shut down without a budget deal, and public employee unions across the country are protesting proposed cuts at the state and local level.

Some leading economists, including Federal Reserve Chairman Ben Bernanke, have argued that while deficits must be addressed, the economic recovery is still too weak to implement deep spending cuts or tax increases.

Despite the budget worries, the economists are more optimistic about growth than they were three months ago. They expect economic growth of 3.3% in 2011, up significantly from the 2.6% growth rate forecast in November.

And economists are less concerned about a double-dip recession. When asked about the likelihood of three months ago, they suggested there was about an 8% chance of the economy falling into another recession. Today they see the chance of a double-dip in the 1% range. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 18,132.70 -81.72 -0.45%
Nasdaq 4,963.53 -24.36 -0.49%
S&P 500 2,104.50 -6.24 -0.30%
Treasuries 2.00 -0.01 -0.69%
Data as of 7:52pm ET
Company Price Change % Change
Bank of America Corp... 15.81 -0.23 -1.43%
Apple Inc 128.46 -1.95 -1.50%
General Electric Co 25.99 0.10 0.39%
Microsoft Corp 43.85 -0.20 -0.47%
Chesapeake Energy Co... 16.68 -0.52 -3.02%
Data as of 4:06pm ET
Sponsors

Sections

Benmosche sparked controversy and criticism during his five years running AIG, but oversaw turnaround that resulted in taxpayer profit on bailout. More

Potential presidential candidate says that improvement in unemployment rate is due to millions of jobless not being counted. More

These people say they've already finished watching all 13 episodes of the new season of 'House of Cards.' More

A social media frenzy about the color of a dress is bringing fame and fortune for one small British fashion company. More

The top 5 consumer complaints have to do with identity theft, debt collectors, imposters, telephone companies and banks. More