US posted smallest monthly deficit in 2 years in December

Jan 12, 2022, 12:33 PM | Updated: Jan 13, 2022, 7:31 am

WASHINGTON (AP) — The federal government last month posted its smallest monthly budget deficit in two years thanks to a rebounding economy that helped boost tax receipts, coupled with slower spending as some COVID relief programs ended.

The Treasury Department reported Wednesday that the December deficit of $21.3 billion was the smallest monthly deficit since a $13 billion shortfall in December 2019. That was before the COVID pandemic hit in in the U.S. and pushed millions of people out of work and sent the economy into a short but steep recession

For the first three months of this budget year, which began on Oct. 1, the government has recorded a deficit of $377.7 billion. That’s 30.1% below the shortfall run up during the same period a year ago when the government was still spending trillions of dollars to keep the economy from falling into an even deeper funk.

Many of those government support programs have now ended or are being tapped less as more people get back to work.

In the October-December period, government revenues were up 30.1% compared to the same period a year ago. Tax revenues from individuals and corporations were both up by solid amounts, reflecting an economy growing this year at the fastest pace since the mid-1980s.

Government spending during that period rose by a much smaller 3.8% compared to the same period a year ago to $1.43 trillion. The government outlays and tax receipts, which totaled $1.05 trillion, were both records for the first three months of a budget year.

The December deficit of $21.3 billion compared to a deficit in December 2020 of $143.6 billion. There would have actually been a surplus last month if not for calendar quirks that required some government benefit payments for January to be paid in December.

The deficit for the 2021 budget year that ended in September was $2.78 trillion, the second highest in history. That followed a record $3.13 trillion deficit in the 2020 budget year, reflecting the massive government spending that occurred because of the COVID pandemic.

Economists believe that with the COVID spending winding down, this year’s deficit will be about half the size of the 2021 shortfall.

Oxford Economics is projecting a deficit of $1.40 trillion this year. Nancy Vanden Houten, an economist with the firm, said that figure is $70 billion higher than what she was forecasting in December, an increase that reflects the fact that Oxford Economics now expects the economy in 2022 to grow at a slower pace of around 4%, as measured by the gross domestic product.

That would be down from a December GDP forecast of 4.4% for 2022. Many economists have been lowering their growth forecasts for this year to reflect the surge in COVID cases in recent weeks.

If President Joe Biden fails to win congressional passage of his Build Back Better spending plan for improvements in the social safety net and combatting climate change, the deficit this year will be $100 billion to $150 billion lower than Oxford’s current estimate of $1.40 trillion, Vanden Houten said.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

President Joe Biden arrives to speak at the White House in Washington, Friday, June 24, 2022, after...
Associated Press

Biden vows abortion fight, assails ‘extreme’ court ruling

WASHINGTON (AP) — President Joe Biden said Friday he would fight to preserve access to abortion after the Supreme Court overturned Roe v. Wade, and he called on Americans to elect more Democrats who would safeguard rights upended by the court’s decision. “This is not over,” he declared. “Let’s be very clear, the health and […]
16 hours ago
Ramesh "Sunny" Balwani, right, the former lover and business partner of Theranos CEO Elizabeth Holm...
Associated Press

Jury takes fraud case against Elizabeth Holmes’s ex-partner

SAN JOSE, Calif. (AP) — The fate of hard-nosed technology executive Ramesh “Sunny” Balwani is now in the hands of a jury that will weigh criminal charges alleging he joined disgraced Theranos CEO Elizabeth Holmes, his former partner, in an elaborate fraud that jarred Silicon Valley. U.S. District Judge Edward Davila handed the case to […]
16 hours ago
Associated Press

Airline merger: Frontier sweetens offer for Spirit Airlines

Frontier Airlines on Friday added more cash and a larger breakup fee to its offer to buy Spirit Airlines, and the Spirit board repeated its preference for Frontier over a rival bid by JetBlue Airways. Frontier added $2 in cash to its previous offer of $2.13 in cash and 1.9126 shares of Frontier for each […]
16 hours ago
Associated Press

Carnival shares cruise higher on gains in revenue, bookings

MIAMI (AP) — Long-battered shares of Carnival Corp. jumped more than 12% Friday as the cruise line owner reported a big increase in revenue, occupancy levels, and bookings for future trips. However, the company posted a $1.83 billion second-quarter loss and said the effects of the pandemic and higher fuel prices will lead to another […]
16 hours ago
FILE - United States women's national soccer team member Alex Morgan, left, listens as teammate Meg...
Associated Press

Athletes react to the Supreme Court’s abortion decision

U.S. national soccer team star Megan Rapinoe expressed her anger Friday over the Supreme Court’s decision to strip the nation’s constitutional protections for abortion, decrying an erosion of rights that women have had for a generation. “I think the cruelty is the point because this is not pro life by any means,” said Rapinoe, who […]
16 hours ago
FILE - United States women's national soccer team member Alex Morgan, left, listens as teammate Meg...
Associated Press

Athletes react to the Supreme Court’s abortion decision

U.S. national soccer team star Megan Rapinoe expressed her anger Friday over the Supreme Court’s decision to strip the nation’s constitutional protections for abortion, decrying an erosion of rights that women have had for a generation. “I think the cruelty is the point because this is not pro life by any means,” said Rapinoe, who […]
16 hours ago

Sponsored Articles

...

Most plumbing problems can be fixed with regular maintenance

Instead of waiting for a problem to happen, experts suggest getting a head start on your plumbing maintenance.
...
Carla Berg, MHS, Deputy Director, Public Health Services, Arizona Department of Health Services

Vaccines are safe if you are pregnant or breastfeeding

Are you pregnant? Do you have a friend or loved one who’s expecting?
...
Arizona Division of Problem Gambling

Arizona Division of Problem Gambling provides exclusion solution for young sports bettors

Sports betting in Arizona opened a new world to young adults, one where putting down money on games was as easy as sending a text message.
US posted smallest monthly deficit in 2 years in December