what is a deficit 
in financial terms a deficit occurs when expenses exceed revenues imports exceed exports or liabilities exceed assets a deficit is synonymous with a shortfall or loss and is the opposite of a surplus a deficit can occur when a government company or person spends more than it receives in a given period usually a year understanding deficitswhether the situation is personal corporate or governmental running a deficit will reduce any current surplus or add to any existing debt load for that reason many people believe that deficits are unsustainable over the long term on the other hand the famous british economist john maynard keynes maintained that fiscal deficits allow governments to purchase goods and services that can help stimulate their economy making deficits a useful tool for bringing nations out of recessions proponents of trade deficits say they allow countries to obtain more goods than they produce at least for a period of time and can also spur their domestic industries to become more competitive globally 1however opponents of trade deficits argue that they provide jobs to foreign countries instead of creating them at home hurting the domestic economy and its citizens also many argue that governments should not incur fiscal deficits regularly because the cost of servicing the debt uses up resources that the government might deploy in more productive ways such as providing education housing or public infrastructure types of government deficitsthe two primary types of deficits a nation can incur are budget deficits and trade deficits a budget deficit occurs when a government spends more in a given year than it collects in revenues such as taxes as a simple example if a government takes in 10 billion in revenue in a particular year and its expenditures for the same year are 12 billion it is running a deficit of 2 billion that deficit added to those from previous years constitutes the country s national debt a trade deficit exists when the value of a nation s imports exceeds the value of its exports for example if a country imports 3 billion in goods but only exports 2 billion worth then it has a trade deficit of 1 billion for that year in effect more money is leaving the country than is coming in which can cause a drop in the value of its currency as well as a reduction in jobs other deficit termsalong with trade and budget deficits these are some other deficit related terms you may encounter advantages and disadvantages of running a deficitdeficits are not always unintentional or the sign of a government or business that s in financial trouble businesses may deliberately run budget deficits to maximize future earnings opportunities such as retaining employees during slow months to ensure themselves of an adequate workforce in busier times also some governments run deficits to finance large public projects or maintain programs for their citizens during a recession a government may run a deficit intentionally by decreasing its sources of revenue such as taxes while maintaining or even increasing expenditures on infrastructure for example to provide jobs and income the theory is that these measures will boost the public s purchasing power and ultimately stimulate the economy but deficits also carry risks for governments the negative effects of running a deficit can include lower economic growth rates or the devaluation of the domestic currency in the corporate world running a deficit for too long a period can reduce the company s share value or even put it out of business today s federal budget deficit in the u s in may 2023 the congressional budget office cbo projected a federal budget deficit of 1 5 trillion for 2023 the cbo specified that this is subject to considerable uncertainty partly due to a shortfall in tax revenue in fact as of july 2023 the deficit has surpassed the estimate sitting at 1 6 trillion 2in terms of the national debt the cbo projected that as of the end of 2023 federal debt held by the public as opposed to the government itself will reach 98 of gdp compared with 79 at the end of 2019 for comparison purposes before the start of the great recession in 2007 it stood at 35 of gdp 2at this point the cbo also projects that debt will continue to climb hitting 102 of gdp in 2025 and 111 in 2030 2