U.S. budget deficit widens to record $1.9 trillion for seven months


The numbers: The U.S. federal budget deficit widened to a record $1.9 trillion in the first seven months of the fiscal year, the Treasury Department said Wednesday. This is up from a $1.5 trillion deficit over the same period last year.

Spending was higher as the government continued to support Americans impacted by the pandemic.

The deficit was $226 billion in April, down from $738 billion in the same month of 2020. Last April, the government sent out the first round of COVID stimulus checks to Americans.

What happened: For the first seven months of the 2021 fiscal year, which ends Sept. 30, receipts were up 16% while outlays rose 22%.

In April, receipts were up 82% while outlays were down 32%. Last year, the government delayed all tax payments until July. This year, only individual tax payments were delayed.

Big picture: The U.S. budget deficit this year is expected to exceed last year’s record $3 trillion deficit. The Committee for a Responsible Federal Budget, an independent think tank, said it expects the deficit this year to total $3.4 trillion. Over the next 10 years, the group projects a deficit of $16.6 trillion. At the same time, the national debt is seen growing to $37.4 trillion from $28 trillion currently.

Federal Reserve Chairman Jerome Powell said last month the federal budget deficit is on an unsustainable path.

“As a nation, we will have to get back to a sustainable path…but this is not the time to prioritize that concern,” he said during a discussion at the Washington Economic Club.

Market reaction: The yield on the 10-year Treasury note
rose to 1.676 on Wednesday on the back of strong inflation readings for April. Stocks


were sharply lower.

Source link


Please enter your comment!
Please enter your name here