WASHINGTON (AP) — The United States (US) federal government’s budget deficit for the first half of this budget year totalled USD743.6 billion, up 7.6 per cent from last year, and well on its way to topping USD1 trillion even before the impacts of the coronavirus were felt.
The Treasury Department reported that the deficit from last October, the start of the government’s budget year, through March was USD52.5 billion higher than the same period a year ago.
The Trump administration and the Congressional Budget Office were already forecasting that this year’s deficit would top USD1 trillion for the first time since 2012. But now with a USD2.2 trillion rescue package approved by Congress and government spending expected to rise sharply, private economists are estimating that this year’s deficit could well exceed USD2 trillion.
Chief Economist at Moody’s Analytics Mark Zandi said he expects the deficit to hit USD2.5 trillion this year and also next year.
Previously, the highest deficits in dollar terms occurred in a four-year stretch from 2009 through 2012 when the government was spending billions of dollars to pull the country out of the deepest downturn since the Great Recession, a slump triggered by the 2008 financial crisis.
This year’s deficit will increase because of the USD2.2 trillion in additional spending approved in the largest relief package ever passed by Congress but also because government revenues will slump as the economy slows if the country, as expected, enters a deep if short, recession.
Chief Economist at Oxford Economics Gregory Daco said the deficit for this year will likely hit USD2.2 trillion, reflecting an economy in free fall which will depress revenues and the stimulus packages already approved. “If additional stimulus measures are passed, the deficit will be larger,” Daco said.
Through March, government receipts totalled a record USD1.60 trillion for the first six months of the budget year, up 6.4 per cent from the same period a year ago.
Outlays were also a record for the first half of the year, totalling USD1.88 trillion, up 6.9 per cent from a year ago.
The deficit for the month of March was USD119.1 billion, down from March a year ago when the deficit was USD146.9 billion.