The U.S. government posted the widest monthly budget surplus in more than five years in June, as spending plunged 47 percent and a stronger economy lifted tax receipts, the Treasury Department said.
Receipts exceeded outlays by $116.5 billion last month, the biggest surplus since April 2008, compared with a $59.7 billion deficit in June 2012, the Treasury said today in Washington. The result exceeded the $115 billion median estimate in a Bloomberg survey of 21 economists.
The Obama administration projects the federal budget deficit will shrink to $759 billion in the year ending Sept. 30, the smallest gap in five years as a stronger economy bolsters revenue. Increased tax collections and rising payments to the Treasury from Fannie Mae and Freddie Mac as housing improves are taking the pressure off of Congress and the White House to achieve an agreement on dealing with spending, deficits or automatic budget cuts.
“Tax receipts are continuing to improve” and that will “persist throughout the rest of the year because the economy is doing better,” said Thomas Simons, a government-debt economist in New York at Jefferies LLC, which predicted a $116 billion surplus for last month.
Today’s report showed revenue rose 10.2 percent in June to $286.6 billion from the same month a year earlier. Spending totaled $170.1 billion compared with $319.9 billion a year earlier, it showed.
For the first nine months of the 2013 financial year that began Oct. 1, the nation’s deficit narrowed to $509.8 billion compared with a $904.2 billion shortfall over the same period from a year before.
The U.S.’s AA+ credit-rating outlook was increased last month 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.
American employers added 195,000 workers for a second month in June, according to a Labor Department report last week. The jobless rate, at 7.6 percent last month, was down from 8.2 percent a year earlier.
The Congressional Budget Office said July 9 that net corporate income taxes were higher by $29 billion, or 17 percent, “probably reflecting growth in taxable profits in both calendar years 2012 and 2013.”
The brighter outlook may help postpone a deadline this year for raising the government’s debt ceiling, and may ease demands from some lawmakers for tough budget cuts. While government spending cuts known as sequestration have helped narrow the deficit, it has also restrained growth.