- Thomas Simons, a government-debt economist in New York at Jefferies LLC
The U.S. government stated that the country's budget deficit widened more than expected last month. The federal budget swung to deficit of $138.7 billion in May compared to surplus of $112.9 billion in the preceding month and missing expectations of deficit of $110.2 billion. At the same time, annualized numbers suggest the balance remained on track to end the year below $1 trillion for the first time in five years. Given the May jump, the deficit in the first eight months of the current budget year reached $626 billion, down $218 billion from the last year's figure, reported Treasury. The Congressional Budget Office predicts the deficit not to grow much this budget year that ends September 30. The deficit is likely to total $642 billion compared to $1.09 trillion last year.
Robust economic growth coupled with an increase in taxes have lifted the government's tax revenue. In the period between October and May, government's revenue climbed 15% to $1.8 trillion. Meanwhile, spending inched up 0.8% to $2.43 billion. Easing the national debt pressure, the government will also get large dividends from Fannie Mae and Freddie Mac this month. Fannie is expected to pay $59.4 billion, while Freddie is likely to pay $7 billion as mortgage giants are paying dividends to refund loans received during crisis.
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