The U.S. federal budget deficit for the month of January has decreased to $22 billion, a significant improvement from $39 billion in the same period last year, according to the Treasury Department’s latest announcement. This result was slightly higher than the forecasted $21 billion deficit made by economists surveyed by the Wall Street Journal.
During January, the government experienced an increase in receipts, surpassing spending levels from the previous year, as reported by the department. Receipts rose by $30 billion to $477 billion compared to a year ago, while outlays also increased by $13 billion to reach $499 billion. The Congressional Budget Office attributes the surge in receipts to the collection of withheld income and payroll taxes, despite a reduction in individual income-tax receipts.
Furthermore, interest on the federal debt grew by $96 billion over the first four months of this fiscal year compared to the same period last year. Interest payments have reached $357 billion so far during this fiscal year, primarily due to the Federal Reserve’s implementation of higher interest rates in an attempt to combat high inflation.
The Congressional Budget Office recently estimated a deficit of approximately $1.5 trillion for this fiscal year ending on September 30. This projection indicates a decrease from last year’s deficit of $1.7 trillion. However, there is a growing concern about the long-term implications of the deficit. Economists warn that debt held by the public is expected to surge from $26.2 trillion to $48.3 trillion by the end of 2034, representing 116% of the gross domestic product, which would be a record high.
Following the news, the yield on the 10-year Treasury note (BX:TMUBMUSD10Y) slipped to 4.165%. Additionally, stocks demonstrated positive momentum, with the Dow Jones Industrial Average (DJIA) experiencing a 217-point increase, equivalent to a 0.6% rise.