What Fiscal Surplus?

The United States’ economic performance during the last two years has been spectacular. Inflation remained quiescent despite rapid output growth and plunging unemployment. Asset values were buoyed—Asian economic troubles notwithstanding— by upbeat earnings expectations, confidence in continued low inflation, and stability in the domestic economic environment. Strong income growth and increased capital gains realizations raised federal revenues beyond the levels projected earlier. Now, the Congressional Budget Office projects annual federal surpluses through the first decade of the new millennium.