U.S. Budget Deficit Shrinks as the Fiscal Debate Rages On
Rewind the clock about two weeks and the U.S. economic and fiscal situation looked a lot different. Private employers have created nearly 7.5 million jobs over the past three years, business activity indexes showed modest but persistent growth, and the housing market seemed to be recovering inexorably, lifting up every part of the economy it touched.
The U.S. Federal Reserve did decide that it was not yet appropriate to taper asset purchases, which was a mixed blessing, but the minutes for the last Federal Open Market Committee meeting reveal that Fed economists believe the economy to be improving at a moderate rate with a generally positive outlook. Barring catastrophic fiscal headwinds, the U.S. economy seemed like it would continue to meander its way through a humble recovery.
Snap back to the present and the U.S. is stumbling its way through the very type of fiscal snafu that economists theorized could be a big enough shock to destabilize the recovery: a partial government shutdown and the risk of default.