The federal budget deficit rose sharply to $163 billion in January, the Treasury Department announced Wednesday, as the government pumped more money into an economy still suffering from the effects of the coronavirus pandemic.
Both revenues and outlays hit record highs for the month, with receipts increasing 3% on a year-over-year basis to $385 billion and outlays growing 35% to $547 billion. “Tax receipts have mostly recovered from the pandemic, reflecting a resilient U.S. economy and the ability of private-sector companies to adjust,” wrote MarketWatch’s Jeffry Bartash. “Yet tax receipts rose year-on-year by almost 10% in January 2020, showing the economy still has a way to go to return to precrisis growth levels.”
The deficit for the first four months of the fiscal year, which began in October, rose to $736 billion, an 89% increase over the same period a year earlier.
Big deficits will likely persist: The big jump in the deficit in January was driven by Covid-related spending, boosted by the passage of a $900 billion relief bill in late December, which authorized a wide range of relief programs, including $600 per person relief checks and enhanced unemployment benefits. President Biden is seeking another $1.9 trillion in relief and stimulus spending, which Democrats hope to pass as soon as March.