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Economy in Brief

October U.S. Budget Deficit Down Y/Y
by Tom Moeller November 14, 2005

The U.S. federal government budget deficit continued lower during the opening month of FY06. The deficit of $47.2B fell 17.6% versus last October, about the same rate of decline as during FY05.

As a percentage of GDP the deficit fell to 2.6% last fiscal year versus 3.6% in FY04. The latest projection from the Congressional Budget Office is for a further decline to 2.4% in FY06.

Net receipt continued firm 9.2% y/y rate last month, powered by 16.0% growth in individual income tax receipts (44% of total receipts). That growth made up for an October shortfall in corporate income taxes (10% of total receipts) which left them 20.5% last October.

Total receipts accounted for 17.5% of GDP last fiscal year, up from 16.3% the prior year but down from 18.4% during the 1990s.

The improved job market continued to lift employment taxes (36% of total receipts) 6.4% y/y, a slowdown versus 8.8% growth during all of FY 2005 which was the strongest increase since 1988.

U.S. net outlays grew 1.3% y/y last month despite a 28.0% gain in defense (19% of total outlays). Medicare spending (12% of total outlays) fell 11.4% y/y but spending on social security (21% of total outlays) rose 5.7%. Spending on health programs (10% of the total) rose 3.5% while spending on education & training (4% of the total) fell 5.0% y/y after double digit gains during three of the last four fiscal years. Interest expense (8% of the total) grew 13.0% with higher interest rates after a 14.9% gain last fiscal year.

The latest projections from the US Congressional Budget Office are available here.

US Government Finance Oct Sept Y/Y FY 2005 FY 2004 FY 2003
Budget Balance $-47.2B $35.7B $-57.3B (10/04) $-318.6B $-412.1B $-377.6B
  Net Revenues $149.5B $151.6B 9.2% 14.6% 5.5% -3.8%
  Net Outlays $196.7B $216.0B 1.3% 7.9% 6.1% 7.4%
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