The US government's monthly budget returned to deficit in May after a big April surplus. But the overall imbalance so far is far smaller than it was the same period last year, putting the country on track for the lowest annual deficit in six years.
The Treasury Department today said that the May deficit totalled USD 130 billion after a surplus of USD 106.9 billion in April, a month when the government usually runs surpluses because of a flood of tax revenues.
For the first eight months of this budget year, the deficit totals USD 436.4 billion, down 30 per cent from USD 626.3 billion for the same period in 2013.
It was the smallest imbalance since 2008. The Congressional Budget Office is forecasting a deficit of USD 492 billion for the full budget year ending September 30.
The government has run a deficit in May, a month when there are no major tax payments, for 59 out of the past 60 years. This year's May deficit was slightly lower than the USD 138.7 billion deficit in May 2013.
The improvement this year reflects a stronger economy and labour market, which translates into more income and higher tax revenues.
The government has also trimmed spending to gain control of soaring deficits in recent years.
Revenues this year totalled USD 1.93 trillion through May, up 7.5 per cent from the same period a year ago.
Government spending over this period totalled USD 2.37 trillion, a drop of 2.3 per cent from a year ago.
In 2008, the government recorded a deficit of USD 458.6 billion, which was the record high at the time. But that record was soon eclipsed as the government ran annual deficits surpassing USD 1 trillion for the next four years.
Those deficits reflected a deep recession, which reduced tax revenue, and higher government spending to stabilise the financial system and pay benefits to people who had lost jobs.
After peaking at USD 1.4 trillion in 2009, the deficit has been falling. It dropped to USD 680.2 billion last year.
