The U.S. budget deficit narrowed to $2.2 trillion during the first nine months of the fiscal year from the same period a year earlier, with the gap between spending and revenue shrinking as the recovery from the pandemic-induced slump boosted tax collections.
Outlays for the first three quarters of the government’s budget year rose 6%, to $5.3 trillion, the Treasury Department said Tuesday. Spending has been boosted by pandemic-related costs that included tax credits, expanded unemployment compensation, emergency small-business loans and stimulus checks to households.
Federal revenue during the period rose 35% when compared with the previous year, to $3.1 trillion, largely due to higher receipts from individual and corporate income taxes.
For the month of June, the U.S. deficit was $174 billion, roughly a fifth of what it was a year earlier. Revenue rose 87% in June to $449 billion, while spending decreased 44% to $623 billion.
While receipts are rising as consumer and business spending picks up and employers add jobs, supply-chain challenges and a lack of workers for lower-paying jobs are headwinds to growth.