The US government’s December budget deficit quadrupled from a year earlier to US$85 billion (RM370.9 billion) as receipts shrank slightly and outlays grew to a new December record, the Treasury Department said on Thursday (Jan 12) as it neared the US$31.4 trillion federal debt limit.
The results confirmed forecasts that revenues would start to ease as a red-hot economy cools, and showed that reductions in pandemic relief spending have faded. Underlying costs for healthcare, Social Security and interest on a growing pool of public debt are rising, the Treasury data showed.
A Treasury official declined to estimate when the debt ceiling may be nominally reached – an event outside analysts predict could happen in coming days or weeks. Treasury data showed that the debt on Tuesday was US$58.5 billion below the limit with an operating cash balance of US$368 billion.
The US$85 billion December deficit compared with a US$21 billion deficit a year earlier, a
strong performance driven by then-record revenues and steep drops in unemployment aid as the economy recovered from the Covid-19 pandemic.
But there were calendar adjustments that shifted some January 2023 benefit payments into December. Without these, the December deficit would have been US$59 billion compared to an US$8 billion gap last year, Reuters cited the Treasury saying.
The Treasury said unadjusted receipts for December shrank by 7% from December 2021 to US$455 billion as individual withheld receipts fell US$14 billion due to lower 2022 year-end bonus payments and Federal Reserve earnings fell to zero from US$12 billion a year earlier as it paid higher interest on bank reserves.
December’s unadjusted outlays grew 6% to US$540 billion as Treasury-paid interest on the public debt grew by US$9 billion from a year earlier and Social Security outlays also rose US$9 billion because of cost-of-living adjustments, a Treasury official said.
For the first three months of fiscal 2023, which began in October, the government reported a deficit of US$421 billion, a 12% increase over the same period of fiscal 2022, with receipts down 3% to US$1.026 trillion, and outlays up 1% to US$1.447 trillion, also a record for the period. Interest on the public debt for the year-to-date period totalled US$210 billion, up 37% or US$57 billion compared with a year earlier. The Treasury official said the increase was due to higher interest rates paid on conventional debt that had expanded by US$1.8 trillion from a year earlier. Payments related to inflation-protected securities fell during the first three months of fiscal 2023.
