The non-partisan Congressional Budget Office said that the projected deficit for the US would be 1.3 trillion dollars rather than 1.4 trillion as thought earlier.
The CBO also cut the projected deficit for the next 12 months to be at $973 billion rather than $1.1 trillion as it had forecast earlier.
Holding out a hopeful picture of deficit reduction, the CBO said that the US deficit would progressively decline with the improvement in economic conditions.
As far as unemployment is concerned, the agency expected it to decline to 8.9 percent in the fourth quarter of this year, and to 8.5 percent in the last quarter of 2012.
Unemployment is not expected to fall below the 8 percent mark before 2014, the CBO said. The consumer price index of 1.5 percent is projected from 2013 to 2016.
The CBO also warned that an extension of the Bush tax cuts which are scheduled to expire in 2012 would raise the deficit. The congress should also move to curb rates of payments to doctors under the Medicare program, else it would adversely affect the deficit.
US has been running trillion dollar deficits for the last two years, this would be the third year of the trend. The US avoided a debt default earlier this month only by agreeing to a painful reduction in the budget, and by setting up a congress super committee which can find additional savings.