Numbers: The gap could grow even larger in the coming months after the US government hit a $ 144 billion budget deficit in December and Washington approved more federal aid to the economy.
The Treasury said Wednesday that the deficit increased last month from a budget gap of only $ 13 billion in the same month of 2019.
The budget gap for the first three months of the fiscal year was $ 573 billion vs. $ 357 billion, up 61% from the previous year.
The increase in the deficit almost completely reflects the surge in government spending trying to lift the economy until the coronavirus pandemic disappears.
Washington has spent trillions of dollars on stimulus checks for families, more generous unemployment benefits, and subsidies to struggling businesses.
read: The United States lost 140,000 jobs in December. How bad was it?
What happened: December tax revenues increased 3% from $ 336 billion in the previous year to $ 346 billion.
The high levels of taxes that Washington collects are due to the strong economic recovery since the outbreak of the pandemic last spring and the coordinating capacity of most businesses.
However, the record surge in incidents and the tightening of government restrictions on business could slow tax revenues again. However, the new restrictions are not very widespread.
Government spending was $ 490 billion, up 40% year-on-year.
Most of last month’s spending growth was related to health care and social security benefits. The federal government is spending more on treatments associated with coronavirus vaccines.
read: Restaurant cuts another 372,000 jobs in December
Big picture: Historically large budget deficits are expected to continue for some time. Last month, Washington approved nearly $ 1 billion in new aid for the economy, and presidential election Joe Biden promised more aid was underway.
The deficit for the fiscal year ending September 30 exceeded $ 3 trillion. This was the largest deficit in gross domestic product since 1945.
The deficit was expected to halve this year, according to the Congressional Budget Office, which will depend on the actions taken under the new Biden administration.
Market reaction: Yield of 10-year government bond TMUBMUSD10Y,
It exceeded 1% in early January for the first time since the early days of the pandemic.
Some investors on Wall Street DJIA,
We are concerned that a high deficit may cause inflation to rise, but prices are low and it is likely that the situation will continue until the economy fully recovers.
U.S. budget deficit rises to $ 144 billion in December, further increasing deficit
Source link U.S. budget deficit rises to $ 144 billion in December, further increasing deficit