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U.S. posts smallest March deficit since 2000
Author: Scarinci Hollenbeck, LLC
Date: April 25, 2014
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An improving economy and reductions in federal spending led the U.S. to the smallest federal budget deficit for March in the past 14 years, according to Bloomberg. The federal government spent $36.9 billion more than it took in last month, marking a dramatic decrease year-over-year, the Treasury Department said on April 10. In March 2013, the federal budget deficit was $106.5 billion.
“The economy is growing, so the tax receipts are up,” Paul Edelstein, director of U.S. financial economics at IHS Global Insight Inc. in Lexington, Mass., told the news source. “We’ve also cut back significantly on expenditures.”
Last week, a report showed that the number of employees on company payrolls passed peak pre-recession levels for the first time in March, which will help to further increase tax receipts, according to the news source. Corporate tax receipts may also be boosted by the recent pickup in the rate of growth. The Treasury showed that revenue increased 16 percent year-over-year, to $215.8 billion in March compared to 186 billion in March 2013. The federal government spent $252.7 billion in March, down 13.6 percent from the $292.5 billion spent one year prior.
Corporate tax receipts increased to 117.5 billion in the first half of the fiscal year, a $17 billion increase, according to The New York Times. Social Security collections increased as well. Lower military spending, fewer outlays for benefits like unemployment insurance and continued payments to the Treasury from Freddie Mac and Fannie Mae also helped the government’s books.
In total, the deficit is expected to equal 4.1 percent of the GDP in 2014, the news source reported. This is down from the peak of almost 10 percent in 2009 – the height of the recession. Deficits going forward are expected to stay level at two percent to three percent over the next few years before spiking at the end of the decade.
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