WASHINGTON – The U.S. budget deficit last month narrowed more than economists had forecast, as rising employment contributed to the strongest October revenues on record.
Spending exceeded receipts by $91.6 billion last month, compared with a $120 billion shortfall in October 2012, the U.S. Treasury Department said Wednesday. The median estimate in a Bloomberg News survey of 16 economists was for a $102 billion deficit last month. Monthly revenue jumped by about 8 percent from a year earlier, while outlays dropped by 4.5 percent, the report showed.
October was marked by a partial government shutdown during the first half of the month and partisan wrangling over the federal debt ceiling, which was suspended Oct. 17, the day the Treasury had projected that its borrowing authority would run out. The agreement to reopen operations created a House-Senate conference committee with a Dec. 13 deadline to offer ways to resolve the fiscal disputes between the parties.
“The government shutdown effect was small,” Mike Englund, chief economist at Action Economics in Boulder, Colo., said before the budget numbers were released. Because federal workers were paid in full for the days they didn’t work, there was not “a major outlay impact,” he said.
Wednesday’s report showed that revenue increased to $198.9 billion last month from $184.3 billion in October 2012. Spending totaled $290.5 billion, compared with $304.3 billion a year earlier, the report showed.
Rising employment and a payroll tax increase are lifting receipts, while the across-the-board federal budget cuts known as sequestration combined with lower unemployment-benefit payments to keep spending in check.
The budget deficit of $680.3 billion in the fiscal year that ended Sept. 30 was the smallest in five years, as employment gains and higher taxes propelled revenues to a record, while spending fell by the most since the Eisenhower administration.
Economic data from the period of the shutdown has been mixed. Employers last month added 204,000 workers, topping the most optimistic forecast in a survey of economists, the Labor Department said Friday. The Thomson Reuters/University of Michigan preliminary consumer sentiment index for November dropped to 72, the weakest since December 2011, from 73.2 in October.
Traveling this week in Asia, Treasury Secretary Jacob J. Lew said he doubts that U.S. lawmakers will want to go through another fiscal impasse such as the one that occurred a month ago.
“It is, I think, very likely that we will not see that kind of a tactic again,” Lew told public broadcaster NHK in Tokyo on Tuesday. “I take heart from the things that I’m told privately, and from the public statements, particularly from Republican leaders, who make it clear that they’ve learned a lesson and that they don’t want this to happen again.”