By Mark Felsenthal
WASHINGTON (Reuters) - The White House lowered its U.S. federal deficit forecast for the 2014 fiscal year by $66 billion to $583 billion on Friday on the basis of gathering economic momentum as evidenced by gains in hiring.
"The deficit has been cut by more than half as a share of the economy, representing the most rapid sustained deficit reduction since World War Two, and it continues to fall," acting White House budget director Brian Deese said in a statement.
The Obama administration projected a $649 billion deficit for the fiscal year ending on Sept. 30 when it delivered its budget proposal to Congress in March. The deficit peaked at $1.4 trillion in 2009 in the aftermath of the 2007-2009 recession. The White House said it revised its forecast in the so-called Mid-Session Review because the national unemployment rate has come down more rapidly than expected. The jobless rate fell to 6.1 percent in June from 6.7 percent in March, a six-year low. The administration said it now expects the deficit to be 3.4 percent of gross domestic product for the year, down from 3.7 percent, and to fall to below 3 percent of GDP in 2015.
President Barack Obama recent speeches has pointed to an improving economic climate, citing gains in hiring, housing and manufacturing as evidence. But polls show many Americans remain downbeat about their prospects five years into the recovery from the recession.
"It is clear that much more needs to be done to accelerate economic growth," the White House said on Friday.
(Reporting by Mark Felsenthal; Editing by Doina Chiacu and Will Dunham)