US Budget Deficit Shrinks US$1 Trillion Through March

The US budget deficit shrunk by more than half in the first six months of the fiscal year, falling US$1 trillion to US$668 billion, the Treasury said on Tuesday.

As the economic recovery from the Covid-19 pandemic has picked up steam and companies return to normal, government outlays on unemployment benefits dropped sharply, while tax receipts from individuals and families picked up, according to the report.

The deficit for October through March plunged 61 percent compared to the same period of the prior fiscal year.

Receipts rose 25 percent in the year-to-date period and outlays fell 18 percent, although spending by the Labour Department, which managed many of the jobless support programmes during the pandemic, dropped 87 percent, the report showed.

As inflation and borrowing rates have increased, interest paid on the public debt jumped 44 percent in March, rising 27 percent in the latest six months.

Rates are likely to go higher after the consumer price index jumped 8.5 percent in the year ended in March. The Federal Reserve is poised to continue to raise the benchmark borrowing rate, with a half-point increase expected in May. (AFP)