Recession Causes Second April U.S. Budget Deficit in 27 Years
But as with other patterns, the financial crisis has even broken the government's "golden April" trend: The federal government posted a deficit of $20.9 billion in April, 2009, and when combined with this year, those are the only two years to register an April deficit in the past 27 years. The federal government ran a $65.4 billion deficit in March.
What's more, the last time the U.S. government posted back-to-back April deficits was in 1963/1964. And in the seven months of fiscal 2010 to date, the deficit is $799.7 billion, only marginally better than the $802.3 billion for the same period a year ago.
In April, revenue totaled $245.2 billion and spending totaled $327.9 billion. Each represents a deterioration from last year's $266.1 billion and $289.5 billion totals, respectively.
Federal Revenues Continue to Disappoint
However, of the two figures, the low $245.2 billion revenue total was the bigger disappointment. The Congressional Budget Office (CBO), in a report issued May 10, projected an $85 billion deficit -- well above the $40 billion estimate of economists surveyed by Bloomberg -- noting that the decline in non-withheld individual income tax receipts "probably results from greater-than-expected declines in non-wage income, such as capital gains, non-corporate business income, interest, and dividends in calendar year 2009."
The April report's most encouraging data point? The ongoing trend in corporate tax receipts. In the seven months of this year, corporate tax receipts are up 8.9% to $77.1 billion.
The same cannot be said of individual income tax revenue, which is down 11.6% in the first seven months to $500.8 billion.
The Obama Administration has forecast a $1.6 trillion deficit for the current fiscal year, fiscal 2010, which began Oct. 1, 2009. The U.S. government also posted a record $1.42 trillion deficit last fiscal year, following a $454.8 billion deficit in fiscal 2008. The $1.42 trillion fiscal 2009 deficit was nearly three times the fiscal 2008 deficit, mainly due to the bank bailout and the $787 billion fiscal stimulus package.
Back-to-Back Trillion-Dollar Deficits
April's surprisingly high deficit also all but guarantees that the U.S. government will post back-to-back $1 trillion deficits -- again largely due to the bank bailout and related financial stabilization spending, plus the fiscal stimulus package. It's a lot of red ink.
But don't fret: CBO says in its May 10 report there's light at the end of the fiscal tunnel. "Receipts in March and April suggest that tax revenues may soon begin to rise again." It had better: With the amount of debt incurred during the recession and financial crisis, the federal government is going to need it.