The U.S. posted its biggest monthly budget deficit on record last month, amid falling corporate and individual tax revenue and increasing federal spending.
The budget gap widened to $234 billion in February, compared with a fiscal gap of $215.2 billion a year earlier. That gap surpassed the previous monthly record of $231.7 billion set seven years ago, according to data compiled by Bloomberg.
February’s shortfall helped push the deficit for the first five months of the government’s fiscal year to $544.2 billion, up almost 40% from the same period the previous year, the Treasury Department said in its monthly budget report March 22. The release was delayed a week by the government shutdown earlier this year.
Receipts dipped less than 1% to $1.3 trillion in the October-February period from the previous year, while spending accelerated 9% to $1.8 trillion.
The fiscal shortfall is widening after President Donald Trump’s $1.5 trillion tax-cuts package that’s weighing on receipts and raising concerns about the national debt load, which topped a record $22 trillion last month.
Federal Reserve Chairman Jerome Powell reiterated his concern over the government deficit in a press conference March 20, saying that the nation’s growing debt pile needs to be addressed. At the same time, there’s a shift among some economists — led by proponents of Modern Monetary Theory — on the dangers of a growing deficit, with low inflation and cheap borrowing costs suggesting there’s room for additional spending.
The Treasury data show tax receipts declined for corporations and individuals in the five-month period, while revenue from customs duties almost doubled, boosted by income from tariffs imposed by the Trump administration.