U.S. government deficit down 17% from same period a year ago
WASHINGTON (AP) – The US budget deficit totaled $ 356.4 billion in the first two months of the budget year, down 17% from the same period a year ago thanks to a sharp increase government revenue which offset a smaller increase in spending.
In its monthly budget report, the Treasury Department said on Friday that the government deficit in October and November was $ 72.9 billion lower than the deficit for the same two months of last year. The government’s fiscal year begins on October 1.
This improvement is explained by the fact that government revenue has grown at a faster rate than expenditure over the past two months.
For the October-November period, tax revenue totaled $ 565.1 billion, 23.6% more than revenue for the same period last year and a record for the first two months of the budget year .
The large increase reflects an improving economy which has seen corporate profits rise and millions of people return to work, increasing individual tax payments. In addition, businesses must offset their share of Social Security tax payments that were deferred last year as part of tax relief granted by Congress during the recession triggered by the pandemic.
Government spending totaled $ 921.5 billion, also a record for the first two months of the budget year, and 3.9% more than the same two months last year.
The budget deficit totaled $ 2.77 trillion for fiscal year 2021 which ended on September 30. It was the second-highest annual deficit on record, surpassed only by the $ 3.13 trillion deficit for 2020.
The two-year deficits have been inflated by the trillions of dollars in government spending approved by Congress to prevent the country from slipping into a deeper downturn due to COVID shutdowns.
The Congressional Budget Office predicts that the deficit for the current fiscal year 2022 will shrink further to $ 1.2 trillion. The CBO predicts that annual deficits will remain below $ 1,000 billion until 2026, when they will once again exceed the $ 1,000 billion mark.
Nancy Vanden Houten, senior economist at Oxford Economics, said she projected a deficit of $ 1.33 trillion for this fiscal year. This assumes that on top of the roughly $ 1,000 billion infrastructure bill that Congress has already passed, lawmakers will end up passing a social and climate measure of roughly $ 1.8 trillion. The price to pay for both measures covers 10 years.
For the month of November, the Treasury report said the deficit stood at $ 191.3 billion, a record for the month of November.