WASHINGTON — The federal government’s budget deficit for the first half of this budget year totaled $743.6 billion, up 7.6% from last year, and well on its way to topping $1 trillion even before the impacts of the coronavirus were felt.
The Treasury Department reported Friday that the deficit from October, the start of the government’s budget year, through March was $52.5 billion higher than the same period a year ago.
The Trump administration and the Congressional Budget Office were already forecasting that this year’s deficit would top $1 trillion for the first time since 2012. But now with a $2.2 trillion rescue package approved by Congress and government spending expected to rise sharply, private economists are estimating that this year’s deficit could well exceed $2 trillion.
Mark Zandi, chief economist at Moody’s Analytics, said that he expects the deficit to hit $2.5 trillion this year and also next year. Previously, the highest deficits in dollar terms occurred in a four-year stretch from 2009 through 2012 when the government was spending billions of dollars to pull the country out of the deepest downturn since the Great Recession, a slump triggered by the 2008 financial crisis.
This year’s deficit will increase because of the $2.2 trillion in additional spending approved in the largest relief package ever passed by Congress but also because government revenues will slump as the economy slows if the country, as expected, enters a deep if short, recession.
Gregory Daco, chief economist at Oxford Economics, said that the deficit for this year will likely hit $2.2 trillion, reflecting an economy in free fall which will depress revenues and the stimulus packages already approved.
“If additional stimulus measures are passed, the deficit will be larger,” Daco said.
Through March, government receipts totaled a record $1.60 trillion for the first six months of the budget year, up 6.4% from the same period a year ago. Outlays were also a record for the first half of the year, totaling $1.88 trillion, up 6.9% from a year ago.
The deficit for the month of March was $119.1 billion, down from March a year ago when the deficit was $146.9 billion.