N.Y. TIMES
Since the recession ended four years ago, the federal budget deficit has topped $1 trillion every year. But now the government’s annual deficit is shrinking far faster than anyone in Washington expected, .... The thrust of a new report released Tuesday by the nonpartisan Congressional Budget Office, estimated that the deficit for this fiscal year, which ends on Sept. 30, will fall to about $642 billion, or 4 percent of the nation’s annual economic output, about $200 billion lower than the agency estimated just three months ago.
The agency forecast that the deficit, which topped 10 percent of gross domestic product in 2009, could shrink to as little as 2.1 percent of gross domestic product by 2015 — a level that most analysts say would be easily sustainable over the long run...
Over all, the figures demonstrate how the economic recovery has begun to refill the government’s coffers. At the same time, Washington, despite its political paralysis, has proved remarkably successful at slashing the deficit through a variety of tax increases and cuts in domestic and military programs....
With the government running a hefty $113 billion surplus in the tax payment month of April, according to the Treasury, analysts now do not expect the country to run out of room under its debt ceiling — a statutory borrowing limit Congress needs to raise to avoid default — until sometime in the fall. That has left both Democrats and Republicans hesitant to enter another round of negotiations over painful cuts to entitlement programs like Social Security and Medicare, and tax increases on a broader swath of Americans, despite the still-heated rhetoric on both sides.
For the moment, the deficit is largely repairing itself. Just three months ago, the Congressional Budget Office projected that the current-year deficit would be $845 billion, or about 5.3 percent of economic output.
The $200 billion reduction to the estimated deficit comes not from the $85 billion in mandatory cuts known as sequestration, nor from the package of tax increases that Congress passed this winter to avoid the so-called fiscal cliff. The office had already incorporated those policy changes into its February forecasts.
Rather, it comes from higher-than-expected tax payments from businesses and individuals, as well as an increase in payments from Fannie Mae and Freddie Mac, the mortgage finance companies the government took over as part of the wave of bailouts thrust upon Washington in the darkest days of the financial crisis.
Meanwhile in Europe.....
HUFFINGTON POST
The eurozone is now in its longest ever recession – a stubborn slump that has surpassed even the calamity that hit the region in the financial crisis of 2008-2009.
The European Union statistics office said Wednesday that nine of the 17 EU countries that use the euro are in recession, with France a notable addition to the list. Overall, the eurozone's economy contracted for the sixth straight quarter, shrinking by 0.2 percent in the January-March period from the previous three months.
Austerity measures have inflicted severe economic pain and produced social unrest across the eurozone, where the average unemployment rate is a record 12.1 percent and higher in some places. In Spain, it's 26.7 percent and in Greece 27.2 percent.
Other major economies have faltered this year but none are in recession. The annualized contraction in the eurozone, based on this quarter's figures, of around 0.9 percent contrasts with the equivalent expansion of the U.S. of 2.5 percent. Meanwhile, China, the world's No. 2 economy, is growing around 8 percent a year.
For many analysts, that discrepancy highlights Europe's flawed economic approach since the end of the financial crisis. Instead of keeping the spending taps on – as the U.S. has largely done – the region concentrated on austerity even though companies and consumers weren't able to plug the gap left by the retrenching state.
However, there have been some recent indications that Europe's leaders are willing to ease up on their adherence to cuts and tax increases at a time of recession. Some countries, for example, are being given more time to meet certain economic and financial targets.
Maybe the French should have stopped protesting gay marriage and instead gone to work or bought some stuff. France slipped back into a recession as the entire euro-zone economy shrank more than expected in the first quarter of 2013, according to European Union data released Wednesday. France’s economy shrunk by 0.2 percent, its first decline in four years, and officials worried that France will continue to fall further behind throughout the year if it can only keep up the current pace. Germany, the largest economy in Europe, posted modest growth after suffering a sharp decline in the last quarter of 2012, with the EU Statistical Office commending Germany for “slowly picking up steam.” But things were especially bleak for Italy, the third-largest economy in Europe: its economy shrunk by 0.5 percent, putting the economy in recession for its seventh straight quarter.