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Economy in Brief

February U.S. Budget Deficit Deeper, Fiscal YTD Narrower
by Tom Moeller March 23, 2006

The U.S. federal government posted a deeper budget deficit during February of $119.2B versus last February's deficit of $113.9B. Nevertheless, the fiscal year to date budget deficit narrowed to $217.5B versus 223.4B during the first five months of FY05.

Net revenues collapsed 50.9% m/m as is often the case during February but rose 10.5% during the first five months versus FY04. Individual income tax receipts (44% of total receipts) rose 10.8% y/y and corporate income taxes (10% of total receipts) rose 29.6% y/y during fiscal year 2005's first five months.

The improved job market raised employment taxes (36% of total receipts) 6.0% y/y though estate & gift taxes fell 0.4% y/y.

U.S. net outlays continued strong and rose 7.6% y/y fiscal year to date. Defense (19% of total outlays) for the first five months of FY06 rose 7.6% from the year prior. The growth in Medicare spending (12% of total outlays) accelerated to 8.5% y/y and spending on social security (21% of total outlays) grew 5.6%. s

Agriculture spending grew 10.6%. Also strong was spending on community & regional development which nearly tripled this fiscal year to date versus last. Spending on health programs (10% of the total) rose 2.1% while spending on education & training (4% of the total) fell 1.9% y/y. Interest expense (8% of the total) grew 24.3% with higher interest rates.

The Current Budget Projections from the US Congressional Budget Office released March 3rd are available here.

US Government Finance Feb Jan Y/Y FY 2005 FY 2004 FY 2003
Budget Balance $-119.2B $21.0B $-113.9B (2/05) $-318.3B $-412.7B $-377.6B
  Net Revenues $112.9B $230.0B 11.9% 14.5% 5.5% -3.8%
  Net Outlays $232.1B $209.0B 8.0% 7.8% 6.2% 7.4%
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