Spotlight on......risks to US growth

Budget deficits are generally associated with economic downturns. Government revenues are hit as lower levels of activity result in reduced tax flows from both households and the corporate sector. At the same time there are usually increased demands on government resources to provide support to ease the burden of lower levels of demand. Generally, this process is short lived and the economy quickly recovers, allowing government finances to re-establish better balance. Unfortunately, the 2008 economic recession was highly atypical, involving a major hit to the financial system. Such reces...