The U.S. budget deficit narrowed to $2.5 trillion during the first 10 months of the fiscal year from $2.8 trillion in the same period a year earlier, with the gap between spending and revenue shrinking as the recovery from the pandemic-induced slump boosted tax collection.
Outlays for the 10-month period rose 4% to a record $5.9 trillion, the Treasury Department said Wednesday. Spending has been boosted by pandemic-related costs that included tax credits, expanded unemployment compensation, emergency small-business loans and stimulus checks to households, but Treasury officials said such outlays are generally decelerating.
Federal revenue during the period rose 18% from the same period the previous year to a record $3.3 trillion, largely due to higher receipts from individual and corporate income taxes.
Revenue declined 54% to $262 billion in July from the same month last year. Treasury officials said revenue was unusually high last July because many tax payments were deferred from earlier in the year as a pandemic relief measure. Spending in July decreased 10% to $564 billion.
While revenue is rising as consumer and business spending picks up and employers add jobs, supply-chain challenges and a lack of workers for lower-paying jobs are headwinds to economic growth.
