Reuters highlights "a larger-than-expected $64.61 billion federal budget deficit in August", based upon record Expenditures and a year-over-year decline in Receipts. David Artig posts some good commentary on the Reuters' article. I will be generous and simply state that the Bush administration's claim to halving the Deficit was based upon increased Tax receipts, which in all fairness, some Economists still predict based on lower Energy prices inciting a rapid rise in Consumer Spending, with resultant increase in Tax Receipts. Those Consumers, though, do not have rising equity in their Homes, face increasing Consumer Prices in other Goods, are awaiting Heating bills of winter, and possess a relative New Product mix with unused months of Product life. This Author has yet to see the benefits of Tax Cuts.
One of the few Tax Cuts which the Author does think make sense tries to help with the Cattle herd replacement after the Drought. This will not be a simple quest, as the Drought has been of long duration, and the Breed herds have also been cut. Restocking will eventually prove that there will not be Capital Gains, but Expensed Losses, simply to regain previous position for these Cattlemen.
The IMF is beginning to feel sorry for the United States, dropping its forecast from a growth rate of 3.3% for 2007 down to 2.9%. This Author rattles the Dice, and could come up with an even lower rate of growth: 2.1%. Lack of Consumer Sales growth combined with nominal declines in Energy Costs will detract from both nominal and real growth rates for the United States. Luckily, I am mostly wrong when I am not asleep. lgl
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