The U.S. posted its smallest budget deficit in five years as employment gains helped propel revenue to a record.
Spending exceeded receipts by $680.3 billion in the 12 months ended Sept. 30, the narrowest gap since 2008, compared with a $1.09 trillion shortfall in fiscal 2012, the Treasury Department said today in Washington.
In September, the U.S. recorded a $75.1 billion surplus, little changed from the surplus in the same month a year earlier.
Stronger hiring has helped reduce the country’s deficit as a share of gross domestic product by more than half in the past four years, narrowing it from a record $1.42 trillion in 2009. Bolstering revenue this year were higher payroll taxes Congress allowed in January, while spending growth has been limited by across-the-board cuts known as sequestration that lawmakers failed to prevent in March.
“We’ve made a lot of fiscal progress in the U.S. because of the sequester cuts, tax rates going back to historic norms and the economy improving,” said Bricklin Dwyer, an economist at BNP Paribas in New York. “Politicians have, thus far, avoided the most difficult choices -- addressing unsustainable spending on entitlements such as Medicare and Medicaid.”
Revenue jumped 15.2 percent to $301.4 billion in September from a year earlier, bringing the annual figure to $2.77 trillion, today’s report showed. Spending increased 21.5 percent to $226.4 billion last month, contributing to a 12-month total of $3.45 trillion, it showed.
The unemployment rate fell to an almost five-year low of 7.2 percent in September, the Labor Department reported last week. Payrolls have grown by 1.6 million workers so far this year.
“Our deficits are getting smaller,” President Barack Obama told high school students in Brooklyn, New York, on Oct. 25, as he campaigned for his budget goals. “We don’t have to choose between growth and fiscal responsibility; we’ve got to do both.”