US deficit grows $236B in March

It’s a 38% decrease from a year ago; receipts rise 6% to $322B

The federal deficit grew by $236 billion in March, a 38% decrease from the $378 billion monthly deficit reported a year ago, while receipts rose, according to U.S. Treasury reports.

Total receipts in March rose 6% to $332 billion compared to a year ago as tax season got underway; receipts for the first six months of the fiscal year were up 7% to $2.188 trillion, which the U.S. Treasury called a record, Reuters reported on Wednesday.

“I think the biggest factor is the continued growth of the economy,” said Jeremy Horpedahl, an associate professor of economics at the University of Central Arkansas.

Horpedahl said the United States’ gross domestic product growth has been strong in the first quarter of the fiscal year.

“We’ll get data on the second quarter of the fiscal year soon this month but the early estimates show that the GDP keeps growing, which means incomes will keep growing and that’s where the federal government is getting the majority of its revenue,” Horpedahl said.

Individual tax refunds, which are deducted from receipts, were $11 billion lower, down 16% from a year ago, while individual withheld receipts in March were up $8 billion, or 2% from a year ago, according to Reuters reporting.

Horpedahl said this generally aligns with his expectations for the start of tax season.

“Total tax receipts across all categories so far this fiscal year are comparable or a little higher than last year, so I think that as we get into the April data, I think we will start to see whether, in total, tax receipts are going to be on target — but I think so far it looks good,” Horpedahl said.

Outlays in March fell 18% to $569 billion compared to a year ago.

Government spending had risen 36% over 2022 last March, in a year with five large bank failures requiring government aid.

Horpedahl said last year’s bank failures could be part of the reduction in government spending, but said government spending is actually higher so far this year compared to last year.

“I think that federal spending is sometimes lumpy throughout the year, so if we look at the total amount of spending so far this fiscal year, it’s up a little bit from last year, but not dramatically different,” Horpedahl said.

“So I think the March numbers look at lot lower, but if you look at the cumulative total, it’s still more spending than last year, and a lot of that is due to the larger interest expenses that we’re paying on the [public] debt with higher rates and larger debt balance.”

Interest on the public debt is still a major driver for government spending; net interest was the fourth largest outlays category in March at $79 billion.

“So far this fiscal year, it’s been over half a trillion dollars compared to under $400 billion last year, for these first six months,” Horpedahl said.

The national debt was $34.6 trillion as of Monday.

“I think the biggest factor is the continued growth of the economy,” — Jeremy Horpedahl, an associate professor of economics at the University of Central Arkansas