The federal government spent less than expected at the end of 2020, so the U.S. Treasury earlier this week sharply reduced its estimates for borrowing in the first three months of 2021.
The Treasury now estimates that it will borrow $274 billion through March, $853 billion less than the $1.1 trillion it expected to borrow in its November estimate. Officials expect to have a cash balance of $800 billion at the end of the quarter.
Last fall, the Treasury had assumed there would $1 trillion in additional relief and stimulus spending at the end of 2020, but that failed to materialize, with Congress passing a $900 billion package only in the final few days of the year. That left the Treasury with a higher-than-expected cash balance of $1.7 trillion, reducing the need to issue more debt.
The Treasury estimates do not include possible spending from another stimulus bill, and the outlook could still change significantly. “There’s just a wide range in what is being proposed in potential future legislation,” a Treasury official told reporters.