WASHINGTON (AP) — The federal government's budget deficit shrank sharply in May because of a calendar quirk. But even with latest improvement, the deficit for the first eight months of this budget year is larger than last year.
The Treasury Department said Friday that the deficit last month totaled $52.5 billion, down from a deficit of $84.1 billion in May 2015. However, much of the result reflected nearly $40 billion in May benefits that were paid in April because May 1 fell on a Sunday.
For the first eight months of this budget year, the deficit totals $407.1 billion, an 11 percent increase over the $366.8 billion deficit recorded for the same period last year.
The Congressional Budget Office is forecasting that this year's deficit will end up being 21.9 percent higher than last year.
Last year's deficit dropped to $439 billion, the smallest deficit in eight years. It's a significant improvement from the first four years of the Obama administration when the deficits topped $1 trillion annually, reflecting the impact of a deep recession on government tax revenues and various efforts the government was making to jump-start economic growth and stabilize the nation's banking system.
But CBO projects that deficits will keep growing over the next decade and will once again top $1 trillion annually beginning in 2022. Much of the increase in deficits will reflect higher costs for Social Security and Medicare as millions of baby boomers retire.
So far this budget year, which began on Oct. 1, government receipts total $2.14 trillion, an increase of 1.7 percent over the same eight months last year. Government outlays total $2.55 trillion, an increase of 3.1 percent over the same period a year ago.