US deficit seen shrinking on job gains: CBO Low prices to delay 'peak oil demand' past 2030, says BofA
The US budget deficit will shrink for a fifth straight year in 2016, marking the longest span of improvement since the surpluses of the late 1990s, as falling unemployment helps increase revenue, the Congressional Budget Office said. The fiscal shortfall this year will decline to $468 billion, or 2.6 percent of gross domestic product, compared with $483 billion in the year ended Sept. 30 and $469 billion forecast in August, the CBO said today in Washington. Next year the gap will be $467 billion, compared with $556 billion seen in August, according to CBO. The nonpartisan agency said lower oil prices and stronger consumer spending will help drive growth this year, predicting a "slight further increase" in the dollar's value in foreign-exchange markets. Monetary policy will help underpin the economy for the next few years, it said. "Over the next year or two, deficits should stay pretty low, and that should be very encouraging," said Gennadiy Goldberg, U.S. strategist at TD Securities USA LLC in New York. "Revenues are really on their way up."
NEW YORK: The recent rout in oil prices could delay the onset of "peak oil demand," or zero global demand growth, by around five years to beyond 2030, Bank of America Merrill Lynch (BofA) said.
The bank had earlier expected that the continuation of high oil prices above $100 per barrel since 2011 would result in peak oil demand by 2025 as consumers moved to smaller and more fuel efficient cars. "Eventually, high prices would have led to substitution out of oil altogether, whether towards other cheaper fossil fuels like natural gas or out of fossil fuels and towards alternatives and renewables and switched to alternative or renewable fuel," BofA said in a note on Jan. 23. It now estimates that if prices stay in the $50 to $70 per barrel range over five years, peak demand would be pushed out past 2030. Crude oil prices LCOc1 CLc1 have more than halved to below $50 a barrel since June due to a growing glut of oil. The impact of permanently lower prices on oil consumption can be profound in the long run, the bank said.