Fiscal 2008 budget deficit seen at $155 billion

Aug 23, 2007 - The U.S. budget deficit for this fiscal year will shrink to $158 billion, the Congressional Budget Office said on Thursday, much lower than a March estimate of $177 billion due mainly to strong economic growth.

In its August review of the budget, the nonpartisan agency forecast the deficit for fiscal 2008, which begins October 1, to be at $155 billion. In March the CBO estimated a fiscal 2008 budget deficit of $113 billion.

The agency cited economic uncertainty due to housing market problems, but said the most likely outlook was for a "sound" U.S. economy. The agency said the long-term budget outlook was "daunting," however, due largely to rising health care costs.

Inflation as measured by the consumer price index for urban consumers is projected to decline to 2.3 percent next year from 2.8 percent this year, the report said.

"Prices for food and energy, which increased during the first half of this year, are expected to moderate, keeping overall inflation lower than in the recent past," it said.