The report today as discussed in the article shown here estimates that new figures show the deficit for the budget year ending Sept. 30 will likely be $296 billion. This is a much better number than the $423 billion previously anticipated.

I found one section of the article to be rather interesting. It states:

“But when measured against the size of the economy — at 2.3 percent of gross domestic product — the 2006 deficit would be lower than the deficits of 17 of the past 25 years. And if recent patterns hold, this year’s deficit figure should improve even more by the time final figures are announced in October.”

Although it might seem as a sigh of relief and that the economy is bouncing back, as stated in my previous post, we do not know what the GDP figures truly are and whether or not they are inflated to appear that everything is as should be. Americans will and eventually be forced to save when the stock market, housing bubble, and other investment vehicles begin to dry up.

What worries me is that we do not seem prepared enough for another shock to the system. The biggest factor yet may be another oil shortage which would certaintly caused our economy to come to a grinding halt. Furthermore, Lending terms are becoming more relaxed, now offering people a 50 year mortgage with little money down! This is unbelievable. People are now basically taking debt that they will be paying for the rest of their lives. Picture the senario where individuals, who make up about 70% of total spending, begin to get pinched on a mass scale, what will happen to the economy, GDP, or those tax receipts which supposedly cut into the budget deficit? It almost seems like a no-brainer that we should try to save and invest with low risk free to protect the capital each of us works so hard to obtain.