The White House is forecasting a budget deficit of 1.21 trillion dollars (983 billion euros) in 2012, 116 billion dollars less than it projected in February, according to a report released Friday afternoon, dpa reported.
The White House Office of Management and Budget (OMB) also expects US GDP to grow at a rate of 2.3 per cent in 2012 and 2.7 per cent in 2013, it reported in its Mid-Session Review.
As a percentage of budget the 2012 deficit is now projected to equal 7.8 per cent of GDP, down from 8.5 percent forecast in February, according to the report.
The OMB said that deficits would be reduced to below 3 percent of GDP by 2017.
The White House projections followed on the heels of a US Commerce Department report released earlier Friday that showed the US economy had grown by a tepid 1.5 per cent in the last quarter.
Nevertheless, the OMB predicts that "the economic recovery that began in 2009 will continue at a moderate rate and unemployment will gradually decline."
The White House report credits the American Recovery and Reinvestment Act for improving the nation's economic condition since 2008 "when we were in midst of the worst recession since the Great Depression."
It goes on to say that the US economy "still faces significant headwinds that have held down growth and limited gains in employment."
The anemic condition of the US economy remains the primary issue in the coming presidential election in November.