The good news is that the federal deficit for fiscal 2013 was $680 billion — lower than the past four deficits, each of which exceeded $1 trillion. The bad news is that even a smaller deficit increases the national debt, which stands at $17.1 trillion.
Some economists talk about letting inflation rise, which would help the nation pay its debts. But that would be another attack on the middle class, whose pay would lag behind rising prices.
On trade, the United States has hit a deficit of $208 billion with China, up $5 billion from a year ago in spite of a weaker U.S. economy. There isn’t much to be expected from trade with Europe either. Unemployment in the 28-nation European Union continues to rise, despite modest improvement in Spain’s convalescent economy.
The government reported late last week that the economy grew at a startling 4.1 percent annual rate in the third quarter. Yet despite the bipartisan budget agreement, the gridlock in Washington threatens to impede the confidence that investors, bankers, and employers need to move forward to create jobs and strengthen the economy further.