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The USA’s federal deficit for 2009 fiscal year reached a record high of US$1.42T, the Treasury Department announced last Friday.
The US government imbalance for the fiscal year ending Sept. 30, 2009, more than tripled last year’s record. As a portion of the economy, the deficit accounted for about 10%, the highest since World War II. For fiscal year 2009, the government collected US$2.1T in revenues, a 16.6 % drop from Y 2008, while government spending jumped to US$3.52T up 18.2% over Y 2008. The Treasury Department projected that the deficits would total US$9.1T over the next decade unless corrective action is taken. Treasury Secretary Tim Geithner pointed to the rising federal debt as a result of the government’s actions to tackle the worst economic recession since the Great Depression of the 1930s. Read more

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Wal-Mart Stores Inc. reported Q-2 earnings Thursday that beat Wall Street expectations, and they said that they are preparing for the US consumers’ newly adopted frugality to be the “new normal” as they do not expect consumer spending to recover in the near term. Lower-priced stores may be suffering less than other retailers during the recession, but that still presents big challenges. Wal-Mart saw an unexpected drop in same-store sales at its U.S. stores for the quarter. Spokesman John Simley said the quarterly decline is believed to be Wal-Mart’s first ever, but noted that same-store sales would have been flat without food price drops. Same-store sales is a Key industry indicator comparing year-over-year sales at stores open more than a year. Customers at Wal-Mart, the world’s largest retailer, are paying for more of their purchases in cash or with debit cards than with credit cards, and they keep buying less expensive products and smaller amounts.

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US consumer spending in May rose for the first time since February, and savings hit a record high as federal stimulus measures boosted incomes, bolstering the view that the economy was close to emerging from recession. US consumer sentiment also edged higher this month to its strongest since February 2008. Consumer spending, which accounts for more than 70% of US economic activity, rose 0.3% in May, the Commerce Department said last Friday. The department also revised up April’s figure to un-changed from a small decline previously. Personal income jumped 1.4% last month, propped up by social benefit payments from the government’s massive economic stimulus. The US$ extended losses vs. the Euro as the data reduced safe haven demand for the “Greenback”.

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U.S. consumer spending rose for a second consecutive month in February and sentiment edged up in March, according to reports on Friday that backed views that the worst of the recession may be over. Spending increased 0.2% after rising by an upwardly revised 1.0% in January, the Commerce Department said. The big adjustment to January’s figure, which was previously reported as a 0.6 % gain, suggested that consumer spending rebounded in the first quarter after a big drop at the end of last year, analysts said.”It looks as though spending will manage an increase of just over 1.0 % at an annual rate in the first quarter,” said Nigel Gault, chief US economist at IHS Global Insight in Lexington, Massachusetts. Consumer spending, which accounts for over two-thirds of US domestic economic activity, fell at a 4.3% annual rate in the fourth quarter, the biggest decline since 1980. Spending dropped 3.8 % in the July/September 2008 period.

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