U.S. Budget Deficit Shrinks From Year Ago on Tax Deadline Shift

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A person walks through the U.S. Capitol Rotunda in Washington, D.C.

Photographer: Sarah Silbiger/Bloomberg

Photographer: Sarah Silbiger/Bloomberg

The U.S. budget deficit narrowed sharply in July as virus relief wound down and receipts more than doubled, reflecting the delay in the federal tax payment deadline from April.

The nations budget gap shrank to $63 billion during the month from $119.7 billion in July 2019, Treasury Department figures showed on Wednesday. The median projection in a Bloomberg survey of economists called for a $90 billion shortfall after a record June deficit of $864.1 billion.

Receipts jumped 124% in July to a record from a year ago, while spending climbed almost 69%, reflecting elevated outlays for enhanced unemployment benefits paid out and support for small businesses.

Even with the narrowing in July, the U.S. deficit in the first 10 months of the current fiscal year totaled $2.8 trillion, up $1.9 trillion from the same period in the prior year. In February, prior to the coronavirus shutdown of the economy, the Office of Management and Budget was projecting a $1 trillion deficit in the fiscal year that ends in September.

In April, the Congressional Budget Office estimated the federal budget deficit would amount to 17.9% of gross domestic product this fiscal year.

Outlays for federal additional unemployment compensation program totaled $73.4 billion, compared with $80.4 billion a month earlier. Outlays for state unemployment benefits totaled $36.1 billion after $35.2 billion in June.

The federal government initially provided $600 a week in addition to state unemployment insurance to help the millions who lost jobs in the broad economic shutdowns as the virus spread. That support expired July 31 and with Congress at a standstill over additional stimulus, President Donald Trump issued executive actions Aug. 8 to extend $300 in weekly federal enhanced jobless benefits. That plan faces administrative and legal hurdles to implement.

Spending by the Small Business Administration, which oversees the Paycheck Protection Program, totaled $26.1 billion, compared with $511.4 billion in the prior month that mainly reflected funding for the PPP. That program closed Aug. 8.

Read More: Struggling Economy Gets Only Limited Help From Trump Actions

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