US June budget deficit hits $228bn, up 156% YoY

July 14, 2023 (MLN): The U.S. government posted a $228 billion budget deficit for June, up 156% from a year earlier as revenues continued to weaken and July benefit payments were accelerated into June, the U.S. Treasury Department said on Thursday, Reuters reported.

The deficit compares to a June 2022 budget gap of $89bn. June receipts fell $42bn, or 9% from a year ago, to $418bn, while June outlays rose $96bn, or 18%, to $646bn.

But some $86bn worth of July benefit payments were made in June because July 1 fell on a weekend, and without these and other calendar adjustments, the June deficit would have been $142bn, a 66% increase over June 2022.

For the first nine months of the 2023 fiscal year, which ends Sept. 30, receipts fell $423bn, or 11%, from the year-ago period to $3.41 trillion.

The decline was primarily driven by lower non-withheld individual income taxes due to lower capital gains in 2022 and lower year-end salary bonuses, as well as sharply higher individual tax refunds as the Internal Revenue Service cleared a backlog of unprocessed receipts.

The Federal Reserve has earned $93bn less this year because it is paying higher interest on bank reserves and no longer has positive net income, a situation that a Treasury official said was expected to continue.

Year-to-date outlays rose $455bn, or 10% from a year earlier to $4.80 trillion.

Higher outlays for Social Security this year have been driven by cost-of-living adjustments, while the interest on the public debt so far this year has risen $131bn, or 25%, to $652bn due to higher interest rates.

Also driving up outlays were $52bn in Federal Deposit Insurance Corp costs to resolve failing banks, a Treasury official said.

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