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Deficit fears fade on Wall Street: CNBC survey

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Wall Street is suddenly yawning over the deficit.

The July CNBC Fed Survey finds that concern with the deficit on the street has reached a seven-month low, with a majority of respondents for the first time saying reducing the nation's red ink is no longer urgent.

In January, 80 percent of respondents said the U.S. should immediately put in place a deficit reduction plan. Now just 40 percent do.

In January, 16 percent of respondents said the nation had "at least a couple of years" to enact a deficit reduction plan. Now, 52 percent of respondents choose that answer.

In addition, 8 percent of respondents say there is no need to enact a deficit reduction plan.

(Read more: Wall Street: Fall taper mostly priced into markets)

It isn't clear why the street has had a change of heart over the deficit. It could well be because the deficit has come down sharply from 10.47 percent of gross domestic product in the third quarter of 2010, to 3.96 percent now. As an issue, it is at least for the moment off the front page.

But it could also be because of the current impact of deficit reduction on growth. Most economists estimate that the sequester and the tax hikes at the beginning of the year will shave between 1 percent and 1.5 percent off of GDP.

Meanwhile, economists increasingly look at the growth results in Europe, which emphasized government austerity over stimulus, compared to the U.S. and believe austerity may not be the best prescription for a weak economy, even if the economy carries high debt levels.

Several economic research papers, most importantly one from the IMF's chief economist, suggested the fund underestimated the impact of austerity it recommended to European countries.

Meanwhile, Wall Street is not gearing up for a serious debt ceiling debate in the fall.

Respondents put the possibility that Congress will fail to raise the debt ceiling and the U.S. will default on its payments at just over 5 percent. About a third of respondents see the coming debt ceiling debate as less contentious than the last one, 19 percent say it will more contentious and 44 percent say it will be about the same.

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