US Budget Deficit Shrinks in May

The federal government’s budget deficit shrank sharply in May because of a calendar quirk. But even with latest improvement, the deficit for the first eight months of this budget year is larger than last year.

The Treasury Department said Friday that the deficit last month totaled $52.5 billion, down from a deficit of $84.1 billion in May 2015. However, much of the result reflected nearly $40 billion in May benefits that were paid in April because May 1 fell on a Sunday.

For the first eight months of this budget year, the deficit totals $407.1 billion, an 11 percent increase over the $366.8 billion deficit recorded for the same period last year.

The Congressional Budget Office is forecasting that this year’s deficit will end up being 21.9 percent higher than last year.

Last year’s deficit dropped to $439 billion, the smallest deficit in eight years. It’s a significant improvement from the first four years of the Obama administration when the deficits topped $1 trillion annually, reflecting the impact of a deep recession on government tax revenues and various efforts the government was making to jump-start economic growth and stabilize the nation’s banking system.

But CBO projects that deficits will keep growing over the next decade and will once again top $1 trillion annually beginning in 2022. Much of the increase in deficits will reflect higher costs for Social Security and Medicare as millions of baby boomers retire.

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza