US budget deficit hits record $3.1 trillion
According to the US Treasury Department, the federal budget deficit surged 3.2 times in the fiscal year that ended on September 30, reaching a record $3.132 trillion.
The state budget gap hit 15.2% of economic output, the largest level since 1945. In 1943, the US budget deficit peaked at 27% of gross domestic product. The deficit-to-GDP ratio topped 20% from 1943 to 1945. Even during the 2009 financial crisis, the figure did not exceed 9.8% of GDP ($1.413 trillion).
In the first six months of the current fiscal year, the budget deficit grew by just 8% (by $52 billion). In the second half, it spiked by 715% (by $2.1 trillion). Such a rapid increase in the deficit was triggered by a number of factors. The coronavirus pandemic fueled a surge in government spending. Besides, the budget was affected by a drop in state revenues caused by high unemployment and disruptions to small and medium-sized business operations.
The past fiscal year marked a rise in budget spending by 47.3% to an impressive $6.552 trillion. At the same time, the department recorded a decrease in revenues by 1.2% to $3.42 trillion. A slump in tax receipts brought by households and businesses had the most profound impact on the government budget. Personal income taxes, the biggest income source, fell to $1.6 trillion from $1.7 trillion, while corporate income taxes also dropped to $212 billion from $230 billion in the 2019 fiscal year.
In September, the first month in autumn and the last month of the current fiscal year, the federal budget deficit amounted to $124.611 billion. By comparison, the US ended the 2019 fiscal year with a budget surplus of $82.768 billion. To date, budget income has dipped by 0.2% to $373.169 billion, while government spending has soared by 71% to $497.78 billion.
The Congressional Budget Office estimated that the US federal debt had totaled 102% of GDP in the 2020 fiscal year, surpassing the size of the national economy in more than 70 years for the first time.