• Budget deficit is smaller than expected.

• Tax receipts improve with economic growth.

• Income-security outlays continue to grow.

The U.S. Treasury Department reported a federal budget deficit of $2.238 trillion for the first nine months of FY 2021. This compares to a $2.744 trillion deficit over the same period last year. For June alone, the deficit totaled $174.2 billion compared to the June '20 deficit of $864.1 billion. Expectations had been for a $204 billion deficit in the Action Economics Forecast Survey.

Overall revenues increased 35.2% y/y so far this fiscal year. Individual income tax payments jumped 61.6% y/y so far in FY'21 due to improved economic growth while corporate tax payments strengthened 187.9% y/y. Social insurance taxes eased 1.5% y/y but customs duties improved 11.2% y/y in FY'21.

Federal government outlays have risen 5.8% y/y so far in FY'21. The increase includes a 45.0% surge in income security payments due to COVID-19 support, including refundable tax credits, expanded unemployment compensation, and the Small Business Administration's Paycheck Protection Program. Spending on health programs grew 6.0% y/y so far this fiscal year. Defense outlays rose 4.7% y/y so far in FY'21 while Social Security payments increased 3.6% y/y. Medicare payments declined 12.5% y/y, due to calendar year differences, while interest payments eased 0.4% y/y so far in FY'21.

Haver's data on Federal Government outlays are contained in USECON; The expectations figure is the AS1REPNA database.