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US Budget Deficit Spikes 34%, Grows For The First Time Since 2009

Friday, October 14, 2016 15:48
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(Before It's News)

One week after the US Treasury revealed that total US debt in fiscal 2016 rose by $1.422 trillion,the third highest annual increase in history, and hitting an all time high of $19.6 trillion…

.. moments ago it also revealed that in the fiscal year ended September 30, the US budget deficit grew by $587 billion, a 34% spike comapred to the post-crisis low of $439 billion in fiscal 2015, despite the Treasury enjoying a healthy surplus of $33 billion in the month of September.

The latest figures show that the government is borrowing 15 cents of every dollar it spends. Government spending went up almost 5 percent to $3.9 trillion in fiscal 2016, but revenues stayed flat at $3.3 trillion.

The deficit arose as a result of $3.3 trillion in receipts (of which $1.5 trillion in personal income taxes, and $1.1 trillion in social security and other taxes), offset by $3.9 trillion in outlays, of which Social Security was by far the biggest spending item, at $916 billion.

But more importantly, in fiscal 2016 the deficit was 3.2% of GDP, compared to a deficit of 2.5% of GDP a year earlier, which was the first increase in the deficit as a share of GDP since 2009. It was also the first increase in the deficit in dollar terms since the financial crisis.

What was also notable is that while total debt rose by over $1.4 trillion, the deficit that needed debt funding grew only $587 billion, raising questions what the rest of the debt was used for. Indicatively, the ratio in the growth of debt to deficit, was 2.4x, the second highest in history, and second only to the 2007 recorded in the year just prior to the financial crisis.

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