By Yali N’Diaye
WASHINGTON (MNI) – Despite “much progress” towards economic
recovery, the U.S. economy is still “operating well below capacity,”
Alan Krueger, the U.S. Treasury’s chief economist and Assistant
Secretary for Economic Policy, said Monday.
However, he added, “there is significant room for additional
progress,” especially as labor markets have started to improve and
private sector job creation has “resumed” in particular.
What’s more, “Conditions in financial and credit markets continue
to improve,” Krueger said.
That said, “the unemployment rate remains stubbornly high,” he
In addition, despite some improvement, activity in the housing
market “remains uneven.”
Against this backdrop, underlying inflation pressures remain
“The high level of unemployment, along with the low level of
capacity utilization, continues to restrain underlying inflation
pressures,’ Krueger said.
However, with the economic recovery underway, budget deficits
should narrow, he said.
“The economic recovery will help to bring down the budget deficit,
which is expected to fall to 5.1 percent of GDP in FY2012,” Krueger
Starting with the report released Monday, the Treasury will no
longer provide the accompanying refunding charts that show the primary
dealers’ forecasts, particularly of budget deficits.
Earlier Monday, the Treasury estimated it will borrow $340 billion
of net marketable debt for the second quarter of 2010, assuming a $280
billion cash balance on June 30, the Treasury announced Monday
The cash balance includes $200 billion for the Supplementary
Financing Program (SFP).
For the third quarter of 2010, Treasury estimated it would borrow
$376 billion, assuming a $270 billion cash balance on September 30.
Details of the quarterly refunding are scheduled to be released on
Wednesday, May 5 at 9:00 a.m. ET.
** Market News International Washington Bureau: 202-371-2121 **