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Economy in Brief

U.S. March Budget Deficit Shallower, 2008 FYTD Deeper
by Tom Moeller April 11, 2008

The U.S. government ran a budget deficit of $48.1B during March, down from last year's March deficit of $96.3B. Despite that decline, for the first six months of FY08 the government ran a budget deficit of $311.4B, up sharply from last fiscal year's deficit of $258.4B during the first six months.

For the fiscal year to date, federal receipts grew just 2.2% from a year earlier. That was down sharply from 6.0% growth during the first six months of FY07. The weaker economy and lower stock prices continued to restrain government revenues. Individual income tax receipts (44% of total receipts) grew 5.1% from the first six months of FY07. That was half the y/y growth logged last year. Withheld income taxes grew 5.9%, down from 8.9% last year. Finally, non-withheld taxes grew 5.1%, one third the rate of the first six months of FY07.

Lower corporate profitability hurt government revenues further. Corporate income taxes (13% of total receipts) amounted to $158.9B, a 7.1% drop from corporate receipts tallied during the first six months of FY07. During FY07 they rose 15.4% during the first six months.

Unemployment insurance contributions fell 6.1% due to negative employment growth and that about repeated the 4.1% decline during the first six months of FY07.

U.S. net outlays grew 5.7% during the first six months of FY08, nearly triple the growth in revenues and double the outlay growth of FY07's first six months. Growth in defense spending (19% of total outlays) totaled 8.5%, up from 6.3% last FYTD but Medicare expenditures (12% of outlays) fell 5.1%. Social security spending (21% of outlays) held about steady at 5.5% and interest expense rose 12.7% as interest rates rose.

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

US Government Finance   March February Y/Y FY 2007 FY 2006 FY 2005  
Budget Balance -$48.1B -$175.6B -$96.3B (3/07) -$162.0B -$248.2B -$318.7B
Net Revenues $178.9 $105.7B 7.4% 6.7% 11.8% 14.1%
Net Outlays $227.0 $281.3B -13.4% 2.8% 7.4% 7.6%
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