U.S. posts another budget deficit as tax revenues sag

World
Europe

The U.S. federal government ran a 14-billion-U.S.-dollar budget deficit in December as revenues sagged following last year’s tax cuts even as the economy appeared strong, Treasury Department data showed on Wednesday.

Analysts polled by Reuters had expected an 11-billion-U.S.-dollar deficit for the month and the gap was the latest sign of deterioration in the government's fiscal position.

A strong U.S. job market has appeared to power economic growth this year, an economic setting that tends to help fiscal revenues. Economists suspect some of the economic strength draws from tax cuts that came into effect at the beginning of 2018.

But Washington's accounts have run 319 billion U.S. dollars into the red since the fiscal year began in October, compared to a 225-billion-U.S.-dollar deficit over the same period a year earlier.

Corporate taxes collected for the October-December period have fallen by 17 percent from a year earlier, while taxes collected from individuals have fallen by some four percent.

The fiscal deterioration began well before the tax cuts, however. The 12-month sum of fiscal deficits has been on a widening trend since early 2016. Washington collected nearly 900 billion U.S. dollars less than it spent in the 2018 calendar year.

Budget gap. /Reuters Photo

Wednesday's data was released about a month behind schedule due to a 35-day partial shutdown of the government in December and January.

The Treasury said federal spending in December was 326 billion U.S. dollars, down seven percent from the same month in 2017, although outlays were slightly higher than a year earlier when accounting for calendar effects.

Receipts during the month were 313 billion U.S. dollars, down four percent from a year earlier. When taking into account calendar effects, receipts were down six percent from a year earlier.

Source(s): Reuters