Deficits Decline

Things were looking up last week for the nation's two most important deficits:

> The U.S. balance of payments deficit in April was the lowest in nearly a year--little more than $100 million according to estimates by Alan Greenspan, a member of TIME'S Board of Economists. That figure was way down from $1.3 billion in March and $1.6 billion in February, let alone the $8.8 billion payments gap last August. The biggest boon last month was that more U.S. investment funds stayed home instead of seeking a higher return abroad. Some European interest rates have fallen lately. Meanwhile, short-term rates in the U.S. have risen as a result of growing loan demand and a somewhat tighter Federal Reserve monetary policy. Since February, rates of 91-day Treasury bills have climbed from 3.07% to 3.51%, and bank prime rates have gone from a low of 41% to as high as 51% . Short-term interest rates are likely to show a slow upturn for the rest of the year, which should continue to aid the balance of payments.

> The U.S. budget deficit for this fiscal year will fall well short of the $38.8 billion projected by President Nixon last January. It will be anywhere from less than $30 billion to $32 billion. The overwithholding of income taxes (TIME, Jan. 24) will reduce the deficit by $6 billion in fiscal 1972. In addition, the President wanted to spend a lot of federal money in a hurry to help lift the economy, but Government agencies simply could not speed up payments and new orders that fast. Much of the spending that Nixon had hoped for this year will be delayed until fiscal 1973, which begins in July. As a result, the fiscal 1973 deficit is likely to be higher than Nixon's originally projected $25.5 billion. Economist Maurice Mann, formerly Nixon's assistant budget chief, predicts that 1973's deficit will "significantly exceed $30 billion." That larger deficit should help the economy accelerate after midyear, but perhaps too much so, heightening the danger of renewed inflation.

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