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Economy in Brief

U.S. Government Budget Deficit Shrinks So Far in FY 2021
by Tom Moeller  August 11, 2021

• July budget deficit is larger than expected.

• Receipts from individuals & corporations remain strong.

• Income security outlays are firm.

The U.S. Treasury Department reported a federal budget deficit of $2.540 trillion for the first ten months of FY 2021. This compares to a $2.807 trillion deficit over the same period last year. For July alone, the deficit totaled $302.1 billion compared to the July '20 deficit of $62.99 billion. Expectations had been for a $199 billion deficit in the Action Economics Forecast Survey.

Overall revenues have increased 17.5% y/y so far this fiscal year. Individual income tax receipts increased 25.6% y/y in FY'21 as employment & earnings continued to grow. The increase was held back by a delayed tax deadline in 2020. Corporate tax payments strengthened 76.2% y/y with improved business profitability. Social insurance taxes eased 1.0% y/y but customs duties improved 14.6% y/y so far in FY'21.

Federal government outlays have risen 4.0% y/y so far in FY'21. The increase includes a winding down of income security payments due to COVID-19. Spending on health programs grew 4.9% y/y so far this fiscal year. Defense outlays rose 4.5% y/y so far in FY'21 while Social Security payments increased 3.6% y/y. Medicare payments declined 10.6% y/y while interest payments rose 2.3% 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.

United States Government Finance July FY'20 FY'19 FY'18 FY'17
Budget Balance (Billion $) -- -$302.050 -$3,131.92 -$984.39 -$779.00 -$665.83
Fiscal YTD -- -$2,540.0 -- -- -- --
% of Total (FY 2020)
Net Revenues (Fiscal Year YTD 2021, Y/Y % Change) 100 17.5 -1.2 4.0 0.4 1.5
  Individual Income Taxes 47 25.6 -6.4 2.0 6.1 2.7
  Corporate Income Taxes 6 76.2 -8.0 12.5 -31.1 -0.8
  Social Insurance Taxes 38 -1.0 5.4 6.2 0.8 4.2
  Customs Duties 2 14.6 -3.2 71.4 19.4 -0.8
Net Outlays  (Fiscal Year YTD 2021, Y/Y % Change) 100 4.0 47.3 8.2 3.2 3.3
  National Defense 11 4.5 5.6 8.8 0.1 6.1
  Health 11 4.9 28.0 6.1 9.8 -1.9
  Medicare 12 -10.6 19.2 10.6 -1.4 0.6
  Income Security 19 33.5 145.0 3.9 -1.6 -2.1
  Social Security 17 3.6 4.9 5.7 4.5 3.1
  Veterans Benefits & Services 3 7.7 9.3 11.9 1.3 1.2
  Education, Training, Employment & Social Services 4 -0.7 75.5 43.7 -34.0 31.6
  Interest 5 2.3 -8.2 15.7 23.6 9.1
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