The U.S. budget deficit widened in May from a year earlier on a 10 percent increase in spending, the Treasury Department said.
Outlays exceeded receipts by $138.7 billion last month compared with a $124.6 billion shortfall in May 2012, the Treasury said today in Washington. The gap was in line with the $139 billion median estimate in a Bloomberg survey of 23 economists.
The Congressional Budget Office last week said that spending in May would’ve been $4 billion less than a year earlier were it not for shifts in the timing of payments compared with May 2012. The U.S.’s AA+ credit-rating outlook was increased this week to stable from negative by Standard & Poor’s based on receding fiscal risks, less than two years after the company stripped the world’s largest economy of its top ranking.
“The fiscal picture has a very long way to go before it is on a sustainable path,” said Thomas Simons, a government-debt economist in New York at Jefferies LLC. Still, “the effect of the S&P ratings outlook revision takes some of the heat off Congress in the near term to address the deficit.”
Today’s report showed revenue rose 9.1 percent in May from the same month a year earlier, to $197.2 billion. Spending totaled $336 billion compared with $305 billion a year earlier, it showed.
For the first eight months of the 2013 financial year that began Oct. 1, the nation’s deficit shrank to $626.3 billion compared with a $844.5 billion shortfall over the same period from a year before.
Stronger-than-forecast economic growth that’s buoying tax revenue and remittances from Fannie Mae and Freddie Mac have spurred the Congressional Budget Office to reduce its U.S. deficit forecasts, S&P said.
The CBO announced May 14 that the budget deficit will shrink this fiscal year to $642 billion, or 4 percent of gross domestic product. That would be the narrowest since 2008, and less than half 2009’s record $1.4 trillion shortfall.
The brighter outlook will help postpone the deadline this year for raising the government’s debt ceiling, and may ease demands from some lawmakers for tough budget cuts. Still, while government spending cuts, known as sequestration, have helped narrow deficits, it may slow growth and prevent companies from adding workers.
U.S. Treasury Secretary Jacob J. Lew said May 31 he is suspending reinvestment of the Government Securities Investment Fund of the Federal Employees’ Retirement System, one of the measures he can use to avoid exceeding the nation’s $16.7 trillion debt limit.
Lew said last month that the Treasury’s extraordinary measures and a one-time payment from Fannie Mae will allow the U.S. to stay under the debt limit at least until September. Yesterday, the CBO reiterated an estimate it made in May that the Treasury will run out of ways to stay under the ceiling by October or November.