US budget deficit reached $ 2.54 trillion in July

The U.S. budget deficit reached $ 2.54 trillion for the first 10 months of this fiscal year, fueled by spending to support the country after the pandemic-induced recession.

The numbers keep the deficit on track to become the second-largest annual deficit in U.S. history, behind the last fiscal year that ended on September 30.

Still, the Treasury Department reported on Wednesday that the deficit through July is 9.5% lower than the same period a year ago.

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This reflected improved tax collection as the economy recovered and the end of many of the emergency support programs put in place after the pandemic in March of last year.

The deficit for fiscal year 2020 reached a record high of $ 3.1 trillion after Congress passed trillions of dollars of support in the form of individual stimulus payments, improved unemployment benefits and support to small businesses.

The Congressional Budget Office forecasts this year’s deficit to narrow slightly to $ 3 trillion. The CBO is forecasting a further improvement for the next fiscal year, which begins Oct. 1, expecting the deficit to fall to $ 1.2 trillion.

However, this estimate does not take into account the impact of two huge spending bills currently moving forward in Congress: a bill of around $ 1,000 billion to support traditional infrastructure programs such as construction. highways, and a $ 3.5 trillion measure backed only by Democrats to address these issues. than poverty and climate change.

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Nancy Vanden Houten, an economist at Oxford Economics, said she expected the deficit to increase this year to $ 3.17 trillion, up slightly from last year’s record of $ 3.13 trillion. Prior to last year, the biggest deficit was a $ 1.4 trillion imbalance in 2009, as the government stepped up support to pull the country out of a deep recession after the 2008 financial crisis.

The government ran deficits in excess of $ 1,000 billion for four years during this period. The CBO predicts that deficits over the next decade will fall below $ 1,000 billion from 2023 to 2025, but will then start to rise and remain above $ 1,000 billion per year for the remainder of the decade, reaching $ 1.86 trillion in 2031. This forecast does not take into account the impact of pending spending measures pushed by the Biden administration.

For the 10 months from October to July, the government reported that its revenues totaled a record $ 3.32 trillion for the period. This was a 17.5% increase from the same period a year ago, when millions of people were unemployed and the country struggled to emerge from the recession triggered by the pandemic.

Corporate tax collection has risen 61% so far this year to $ 324 billion as many companies saw their profits increase when the country reopened.

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Spending for the first 10 months of the budget year totaled a record $ 5.86 trillion, up 4% from the same period a year ago, although many categories of spending have started to decrease recently with the end of support programs.

Department of Labor spending fell to $ 30 billion in July from $ 80 billion in July 2020, a drop largely due to lower unemployment benefits as more Americans found work and many states have phased out their extended unemployment benefits before their September deadline.

The July deficit totaled $ 302.1 billion, a record for the month and up from a deficit of $ 63 billion in July 2020. However, the comparison has been skewed by a delay in the fiscal deadline which boosted personal and corporate tax revenues that the government would normally have collected earlier in the year.