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Economy in Brief

U.S. Budget Deficit Deeper Due to Revenue Shortfall & Spending Surge
by Tom Moeller March 13, 2008

The U.S. government ran a budget deficit of $175.6B last month, quite a bit higher than last year's February deficit of $120B.

For the first five months of FY08 the government ran a budget deficit of $263.3B versus a deficit of 162.2B during the first five months of FY07.

For the fiscal year to date, growth in federal receipts slowed to just 1.3%, down from 9.3% growth during the first five months of FY07. Lower stock prices and the weaker economy with its slower employment growth stalled growth in individual income tax receipts (44% of total receipts) at 0.7% from 12.8% last FYTD. Withheld income taxes grew 5.3%, half the rate of gain last year, but non-withheld taxes grew just 3.6% versus 20.9% growth during the five months of FY07.

Corporate income taxes (13% of total receipts) fell 4.8% due to lower corporate profits. During FY07 they rose 16.5% during the first five months. Unemployment insurance receipts fell 6.1% due to lower employment growth.

U.S. net outlays grew 10.2% early this fiscal year and that was nearly four times the growth early in FY07. Growth in defense spending (19% of total outlays) surged to 27.8% while Medicare expenditures (12% of outlays) surged 47.3%. Growth in social security spending (21% of outlays) held about steady at 4.8% but interest expense fell 1.5% as interest rates backed down a bit.

The Government's financial data is available in Haver's USECON database.

US Government Finance   February January Y/Y FY 2007 FY 2006 FY 2005  
Budget Balance -$175.6B $17.8B -$120.0B (2/07) -$162.0B -$248.2B -$318.7B
Net Revenues $105.7B $255.2B -12.1% 6.7% 11.8% 14.1%
Net Outlays $281.3B $237.4B 17.1% 2.8% 7.4% 7.6%
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