US Government deficit increased by 25.1% in first 2 months of budget year

by Karen Faulkner, Worthy News Correspondent

(Worthy News) – The US government deficit in the first two months of the budget year increased by 25.1% more than it was at the same time last year, PBS reports. The rise reflects increased government spending to manage the COVID-19 pandemic against a related backdrop of decreased income from taxes. The budget year begins on October 1.

On Thursday the Treasury Department reported the deficit as $429.3 billion for this year’s October-November period, compared to $343.3 billion in the same period for 2019. The deficit for October was a record $284.1 billion, breaking the 2009 previous record for October of $176 billion deficit, AP News reports. At that time the country was trying to recover from a deep recession caused by the 2008 financial crisis.

The deficit shows “an 8.9% jump in outlays, to $886.6 billion, and a 2.9% decline in tax revenues, to $457.3 billion,” PBS said. While the deficit for the first two months of this budget year is a record, government spending during the same period is a record too.

As millions of people lost their jobs in the pandemic, income tax revenues dropped by 3.2% to $237.7 billion.

“The outlook for the deficit for the full fiscal year depends heavily on the course of the pandemic, the economic recovery and whether additional stimulus measures are passed,” Nancy Vanden Houten, lead economist at Oxford Economics told AP News. According to Vanden Houten, if Congress approves a further $1 trillion in economic relief, the deficit could be some $2.5 trillion in 2021.

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