Dec. 12 (Bloomberg) -- The U.S. government’s budget deficit narrowed in November from the same month last year, helped by an improvement in tax receipts.
The $137.3 billion shortfall is smaller than the $150.4 billion deficit posted in the same month last fiscal year, according to Treasury Department statistics issued today in Washington. Economists projected a $139.9 billion gap, according to the median estimate in a Bloomberg News survey.
“We’re seeing some signs of better economic growth,” Gary Thayer, chief macro strategist at Wells Fargo Advisors LLC in St. Louis said before the report. “We are hoping to see some modestly better revenue figures.” Still, “we would need to see a much stronger economy to bring down the deficit.”
The report follows the failure of a 12-member bipartisan supercommittee of the U.S. Congress to agree on ways to close the federal deficit, potentially triggering $1.2 trillion in automatic budget cuts. Barring action to thwart the reductions, spending on defense, education, transportation and the environment will face automatic cuts.
Estimates of 30 economists in the Bloomberg survey ranged from deficits of $166.2 billion to $125 billion. The non- partisan Congressional Budget Office estimated on Dec. 7 a November budget deficit of $139 billion.
So far in the fiscal year that began in October, the budget deficit was $235.8 billion compared with $290.8 billion in the same period last year.
Spending fell 3.2 percent last month from the same time a year ago to $289.7 billion, and revenue climbed 2.3 percent to $152.4 billion.
Individual Tax Receipts
Individual income tax receipts in the first two months of this fiscal year rose 16 percent to $157.4 billion. Corporate income tax receipts rose to $4.1 billion from a shortfall of $7.5 billion in the prior fiscal year.
Spending so far this fiscal year is lower because certain government payments were shifted into the prior month in October. The CBO said that barring this shift, spending so far this fiscal year would be on par with last year at this time.
Outlays by the Defense Department fell to $111.2 billion for the fiscal year to date.
There is optimism that the world’s largest economy will weather the financial crisis in Europe and avoid a recession in 2012, according to the quarterly Bloomberg Global Poll conducted Dec. 5-6 of 1,097 investors, analysts and traders who are Bloomberg subscribers.
“At this point it doesn’t appear to be hurting us,” Thayer said. Still, “several of the euro zone countries are in recession and that could dampen demand for some U.S. exports.”
Less than a quarter of investors say they expect the U.S. to relapse into recession within the next year, according to the poll. In September, half those surveyed projected a U.S. economic recession within that time frame.
The CBO said last month that it expects the unemployment rate to hold close to 9 percent and economic growth of about 2.5 percent. The expiration of tax cuts and constraints from this year’s Budget Control Act “will cause federal fiscal policy to significantly restrain economic growth in 2012 and 2013,” Douglas Elmendorf, director of the CBO, said in Nov. 15 testimony before the Senate Budget Committee.
--Editors: Vince Golle, Carlos Torres
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