The U.S. government’s budget deficit narrowed in July, as spending dropped by 11.9 percent from a year earlier and some payments were accelerated to the previous month for calendar-related reasons.
The gap shrank 46.2% to $69.6 billion from a $129.4 billion shortfall in July 2011, the Treasury Department said today (Aug. 10) in Washington. Last month’s gap was smaller than the projected $90 billion deficit, according to the median estimate in a Bloomberg News survey. For the first 10 months of this fiscal year the deficit was 11.5% narrower than in the year-earlier period.
“On an underlying basis and absent policy changes, it appears that we are on a path for the deficit to narrow by roughly $100 billion per year,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Conn.
That is “moving in the right direction but not nearly fast enough,” he said by e-mail before the report.
The House and Senate are in a five-week recess and are set to be in session together for 13 days before the Nov. 6 election. Neither Democrats nor Republicans see an advantage in spending time before the election on averting automatic income tax increases and the $1.2 trillion in spending cuts that start taking effect in January. Each side wants to try to improve its negotiating position depending on which party will occupy the White House and control Congress.
A Treasury official who briefed reporters said $35 billion in monthly recurring benefit payments that would have been made in July were accelerated to June because July 1 was a Sunday.
Revenue rose by 16% in July from the same month a year earlier to $184.6 billion from $159.1 billion, and spending fell to $254.2 billion from $288.4 billion.
Estimates of the July budget gap ranged from $71 billion to $150 billion in the Bloomberg survey of 21 economists.
For the first 10 months of the fiscal year that began in October, the budget deficit narrowed to $973.8 billion from $1.1 trillion in the same period last year.
Individual income tax receipts in the first 10 months of this fiscal year rose to $928.2 billion from $890.7 billion in the same period last year. Corporate income tax receipts rose to $182.4 billion from $140.5 billion.
The Congressional Budget Office estimated this week the July deficit would be $71 billion. The CBO said in a report dated Aug. 7 that receipts increased and outlays were lower mostly because of the timing shift in certain payments.