Budget Gap Widens in May to $139 Billion

Wednesday, 12 Jun 2013 02:17 PM

 

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The U.S. government posted a budget deficit of $139 billion in May, 11 percent higher than a year ago and above economists' expectations, partly because of temporary calendar adjustments, the Treasury Department said.

May has had a deficit for 54 out of the last 59 years, a Treasury official said, as it is typically the month when the government refunds tax payments to U.S. citizens.

But so far this fiscal year, which began in October, the government budget deficit has shrunk faster than expected, standing at $626 billion at the end of May, 26 percent lower than the deficit in May 2012.

That is largely due to a 15 percent increase in tax receipts compared to last year, at $1.8 trillion, while spending has increased by only 1 percent. Revenues have been boosted because payroll tax cuts expired, taxes went up on richer Americans and the economy has started to recover.

The Congressional Budget Office last month estimated the United States is on track for its first deficit below $1 trillion since President Barack Obama came into office. The deficit should fall to 4 percent of GDP this year, less than half the shortfall in 2009, the CBO said.

Standard & Poor's on Monday revised the U.S. credit outlook to stable from negative, citing an improved economic and fiscal outlook.

The better state of the government's finances will likely be a factor in budget battles in Congress over whether further belt-tightening is needed.

Tax receipts last month, at $197 billion, were 9 percent higher than receipts in May 2012. Government spending was $336 billion in May, above the year-ago level of $305 billion, partly due to calendar adjustments that shifted $33 billion in benefits payments from June into May because June 1 fell on a Saturday.

Adjusting for calendar changes, the U.S. May budget gap would be $110 billion, versus $125 billion in May 2012.

In the past seven months, government spending has increased 1 percent to $2.4 trillion compared to the same period last year.

© 2014 Thomson/Reuters. All rights reserved.

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