(Updates with economist’s comment in fourth paragraph.)
July 13 (Bloomberg) -- The U.S. posted a monthly budget deficit of $43.1 billion in June, smaller than a year earlier and reflecting a decline in spending.
In June 2010, the shortfall was $68.4 billion, according to the Treasury Department’s monthly budget statement, released today in Washington.
A slowing economy and restrained job growth may limit tax receipts for the government, raising the risk that the budget deficit will reach a record this fiscal year. The shortfall underscores the urgency surrounding budget negotiations between President Barack Obama and Congress as the U.S. approaches a $14.3 trillion statutory debt limit.
“We need stronger economic growth to bring the deficit down or some restraint on spending,” said Gary Thayer, chief macro strategist at Wells Fargo Advisors LLC in St. Louis. “Unfortunately, we’re in a soft spot on the economy. We really don’t have a robust recovery.”
The median projection in a Bloomberg News survey of economists called for a $45.4 billion gap in June. Estimates in the survey of 30 economists ranged from $30 billion to $75 billion.
For the fiscal year to date, the budget deficit was $970.5 billion compared with $1 trillion the prior fiscal year to date, according to the Treasury’s monthly budget statement.
In June, revenue and other fees decreased 0.6 percent to $249.7 billion, according to the Treasury’s statistics.
Individual income tax receipts so far this fiscal year rose 24.3 percent to $814.9 billion. Corporate income tax receipts rose 1 percent to $134.3 billion.
Spending by the government fell 8.4 percent in June from the same month last year to $292.7 billion.
The Congressional Budget Office projected a monthly shortfall of $45 billion for June.
“Two adjustments to the estimated subsidy cost of loans and loan guarantees made in previous years reduced outlays by roughly $21 billion this June,” the CBO said in a budget estimate released July 11.
The fiscal 2011 budget shortfall may match a record of $1.4 trillion, according to the CBO. In fiscal year 2010, the annual budget deficit was $1.3 trillion after a $1.4 trillion in fiscal 2009.
“There is no plan to bring deficit spending back under $1 trillion per year following the recession let alone tackling the Baby Boomers’ demands for health and retirement care over the next few decades,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “If Congress does not act soon, the Treasury yields can go only one direction and that is straight up.”
--Editor: Vince Golle, Carlos Torres
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