“Economy will shrink by 2.2 percent, unemployment may hit 9 percent”
The federal budget deficit will hit an unparalleled $1.2 trillion for the 2009 budget year and the U.S. economy will likely contract by more than 2 percent, according to a new Congressional Budget Office report.
The eye-popping estimates reflect plummeting tax revenues because of the recession and about $400 billion spent to bail out the financial industry and take over mortgage finance companies Fannie Mae and Freddie Mac. Last year’s deficit was $455 billion.
The CBO estimate released Wednesday also sees the U.S. economy shrinking by 2.2 percent this year and recovering only slightly to grow by 1.5 percent in 2010. It foresees the unemployment rate eclipsing 9 percent early next year unless the Obama administration steps in. . . . . .
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